When Allan Fawcett decided to give up his career as a computer scientist in 2011, he knew he wanted to travel for at least a few years, mainly around Europe. After decades in the tech industry, he was ready to give his mind a break, he says. “Computer programming was destroying my brain,” he says. Assets“I needed a way out.”
What he didn’t know was that this escape would be permanent. Shortly after his retirement, he met his current wife Elisabeth and finally took the step of moving to Spain with her permanently.
Fawcett, now 67 and based in Spain by marriage, couldn’t be happier with his decision. Although his wife still works, he spends his days playing tennis, reading and going to the beach or cafes with his expat friends in Barcelona. He and his wife are able to travel the continent and are even planning a trip to Paris for the Olympics this year.
The same lifestyle wouldn’t be possible in the U.S., says Fawcett. Housing is much more affordable, food is cheap, and wine is even cheaper. The public transit system is a godsend; Fawcett doesn’t have a car and doesn’t need one to get around. Being able to walk is also a huge advantage.
“Life is good here,” says Fawcett, who moved here in 2019. “You can eat outside everywhere, the weather is fantastic. Everything is very affordable.”
Fawcett is part of a growing trend of retirees, spurred by America’s pension crisiswho move abroad rather than retire in the United States. As of December 2022, more than 700,800 people were receiving Social Security benefits abroad, according to the most recent available data from the Social Security Administration. In 2000, that number was fewer than 400,000.
Some people move abroad because they simply cannot live comfortably on a fixed pension in the United States, as housing and health care costs become increasingly prohibitive. A significant number of retirees in the United States rely almost entirely on Social Security payments to make ends meet, which an average of about 1,900 USD per monthA growing proportion older Americans live in povertyand social services are few, if any.
Others have always dreamed of traveling and immersing themselves in other cultures. And still others could afford to stay in the United States but realized they could get much more for their money abroad.
“It costs us next to nothing”
The latter is true for Susan Keenan Sweeney and her husband Joe, who moved to Hungary in 2015 (Joe was born in Hungary but left as a child). Although Sweeney, 69, enjoyed success in the U.S. with a career in banking software and even took early retirement in Florida, she was put off by the increasingly high costs of housing and healthcare.
When she and her husband visited Hungary before moving, they saw the affordable cost of living and slower pace of life and decided almost “on a whim” to move. They now own a house in the countryside about two hours outside of Budapest, surrounded by vineyards. Sweeney gardens and enjoys the seasonal fresh produce available at the nearby market, and makes jams and jellies at home; the couple spends winters in Spain and travels extensively throughout Europe the rest of the year.
Courtesy of Susan Keenan Sweeney
Sweeney also points out the extensive public transport system as a big plus:Use is free for people over 65and there is a train station at the bottom of the hill where they live – as well as the sense of security and community they feel. They save thousands a year in property taxes compared to Florida, and expat health insurance costs a fraction of American health insurance, she says. One of her biggest monthly expenses is her U.S. Hulu subscription that they watch via VPN.
“I’d like to think I’m one of the frontrunners when it comes to retirement,” says Sweeney. “Living here costs us next to nothing.”
The disadvantages of living abroad
Of course, there are downsides. The rest of Sweeney’s family lives in the U.S., so they have to plan trips to see each other. The cultural differences can be difficult to manage, at least at first, and Sweeney is still learning the basics of the Hungarian language. There isn’t the same level of individual prosperity in Spain as in the U.S., Fawcett points out; the typical salary is much lower than the six-figure jobs you can find in the StatesAnd of course the income Tax burden significantly higher.
If Sweeney and Fawcett had spent their careers in Europe, they would not have been able to save as much money as they did during their well-paying careers in the U.S. Most of their investments are still in U.S. financial institutions because it’s difficult to transfer them. And there’s a lot of red tape and bureaucracy to deal with when moving abroad. Sweeney and her husband hired a lawyer to help them buy their home.
“The first few years are all about bureaucracy,” says Fawcett. “Everything you want in Spain requires a lot of paperwork.”
But the standard of living for a larger portion of the population is much better than in the United States, Fawcett claims. There are the little things, like fresher, cheaper food and concert tickets that are much more affordable and easier to get. And then there are the bigger benefits, like months of paid maternity leave, low-cost secondary education and affordable health care.
Courtesy of Susan Keenan Sweeney
“This is not the United States,” says Sweeney. “Things are done differently here, and that’s why we’re here.”
And while universal health care systems Although hospitals like those in Hungary and Spain are often criticized for long wait times and potentially poorer care than in the U.S., both Fawcett and Sweeney are happy with the standard of care they have received, including for surgeries and major procedures like colonoscopies. One downside is that many doctors don’t necessarily speak English. Sweeney says if something serious happens, they would consider flying back to the U.S. for treatment because of the language barrier.
“If you were an American to come in here and go to a doctor’s office, I would have to pick you up off the floor,” Sweeney says of the culture shock. “There’s no dealing with insurance. You come in, see the doctor and leave.”
Mindy Yu, director of investments at Betterment, cautions anyone considering retiring abroad to take the time to consider the significant financial, legal and logistical pitfalls.
“It’s important not to view retirement abroad as the cheaper option, but to start saving as early as possible while diversifying your portfolio to avoid risk,” says Yu. “Consulting with a tax advisor with international experience is essential, as living abroad can also bring new tax obligations, both in the U.S. and in your new country of residence.”
Fawcett plans to stay in Spain with his wife, especially since she cares for her 91-year-old mother and has grown children there. Sweeney also says she and her husband are staying in Hungary for the long haul, although they may eventually move from the vineyards to Budapest.
“I would advise anyone who wants to do this to go on vacation, rent a house and look around. You find yourself in places you never dreamed you would be,” says Sweeney. “If you’re retired and have a few months left, what the heck?”