Record Number of Americans Retire Abroad Because U.S. Is Too Expensive

When Allan Fawcett decided to retire from his computer science career in 2011, he knew he wanted to spend at least a few years traveling, especially in Europe. After decades of working in technology, he was ready, as he puts it, to give his mind a break. Computer programming had destroyed my brain, he told Fortune. I needed an escape.

What he didn't know was that this escape would become permanent. He met his current wife, Elisabeth, shortly after retiring, and eventually decided to settle down in Spain with her permanently.

Fawcett, now 67 and a resident of 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 expat friends in Barcelona. He and his wife are able to travel around the continent, and are even planning a trip to Paris for this year’s Olympics.

The same lifestyle wouldn’t be possible in the United States, Fawcett says. Housing is much more affordable, food is cheap, and wine is even cheaper. The public transportation system is a blessing; Fawcett doesn’t have a car and doesn’t need one to get around. The ability to walk is also a major plus.

“Life is good here,” says Fawcett, who became a resident in 2019. Outdoor dining is everywhere, the weather is beautiful. Everything is very cheap.

Fawcett is part of a growing trend of retirees, spurred by the U.S. retirement crisis, moving abroad instead of spending their golden years in the United States. As of December 2022, more than 700,800 people were receiving Social Security benefits abroad, according to the most recent data available from the Social Security Administration. In 2000, that number was fewer than 400,000.

Some emigrate abroad because they simply cannot live comfortably on a fixed retirement income in the United States, where housing and health care costs, in particular, are becoming increasingly unaffordable. A significant number of retirees rely almost entirely on Social Security payments to make ends meet in the United States, which average about $1,900 a month. A growing share of older Americans live in poverty, with social services few and far between, if any.

Others have always dreamed of traveling and immersing themselves in other cultures. Still others could afford to stay in the United States but realized they could get much more for their money abroad.

It costs us almost nothing

Such is the case for Susan Keenan Sweeney and her husband Joe, who moved to Hungary in 2015 (Joe was born in Hungary but moved as a child). Although Sweeney, 69, had a successful career in banking software in the United States and even retired early to Florida, she was put off by the increasingly high costs of housing and health care.

When she and her husband visited Hungary before moving, they found the cost of living there affordable and the pace of life slower and decided, almost on a whim, to move. They now have a house in the countryside, about two hours from Budapest, surrounded by vineyards. Sweeney gardens and enjoys the fresh seasonal produce available at the nearby market, making jams and jellies at home; the couple spends winters in Spain and travels extensively throughout Europe the rest of the year.

Susan Keenan Sweeney and her husband, Joe Horvath, in Budapest.

Courtesy of Susan Keenan Sweeney

Sweeney also points out that the extensive public transportation system is a major plus—it’s free for those over 65, and there’s a train station at the bottom of the hill they live on—as is the sense of safety and community they feel. They save thousands of dollars a year in property taxes compared to Florida, and expat health insurance is a fraction of the cost of U.S. health insurance, she says. One of their biggest monthly expenses is their U.S. Hulu subscription, which they watch via VPN.

“I’d like to think I’m on the cutting edge of retirement technology,” Sweeney says. “It costs us next to nothing to live here.”

The compromises of life abroad

Of course, there are drawbacks. The rest of Sweeney’s family lives in the United States, so they have to plan trips to see each other. Cultural differences can be difficult to navigate, at least at first, and Sweeney is still learning the basics of Hungarian. Individual wealth levels are not the same in Spain as in the United States, Fawcett points out; the average salary is far lower than the six-figure jobs found in the United States. And of course, the income tax burden is much higher.

Sweeney and Fawcett wouldn't have been able to save as much money over their well-paid careers in the United States if they had spent their careers in Europe. Most of their investments are still in American financial institutions because of the difficulty of transferring them. And there are a lot of other red tapes to go through when moving abroad. Sweeney and her husband hired a lawyer to help them buy their home.

The first two years are all about bureaucracy, Fawcett says. Anything you want to do in Spain requires a ton of paperwork.

But the standard of living is much better for a larger portion of the population than in the United States, Fawcett says. There are the small benefits, like fresher, cheaper food and much more affordable and accessible concert tickets. And then there are the big benefits, like months of paid maternity leave, inexpensive high school education and affordable health care.

On the road to Susan Keenan Sweeney's house in Hungary.

Courtesy of Susan Keenan Sweeney

“It’s not like the States,” Sweeney said. “They do things differently here, and that’s why we’re here.”

Universal health care systems like those in Hungary and Spain are often criticized for long wait times and the risk of lower-quality care than in the United States. Both Fawcett and Sweeney are satisfied with the quality of care they have received, including for surgeries and major procedures like colonoscopies. The downside is that many providers may not speak English. Sweeney says that if something serious happened, they would consider returning to the United States for treatment because of the language barrier.

“If you're an American and you go to a doctor, I have to pick you up off the floor,” Sweeney says of the culture shock. “There's no problem with insurance. You just go in, see the doctor, and leave.”

Mindy Yu, chief investment officer at Betterment, cautions those looking to retire abroad to take the time to plan for the enormous financial, legal and logistical pitfalls that come with it.

It's critical to avoid viewing overseas retirement as the cheapest option and to start saving as early as possible, while diversifying your portfolio to avoid risk, Yu says. Consulting a tax professional with international expertise is essential, as living abroad can also come with 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 adult children in the area. Sweeney, too, says she and her husband are in Hungary for the long haul, though they may eventually leave the vineyards for Budapest.

“I would urge anyone who wants to do this to go on vacation, rent a house and look around. You end up in places you never dreamed of going,” Sweeney says. “If you’re retired and you have a few months to go, what’s in store for you?”

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