Retiring abroad changes where you live, not who taxes you. US citizens keep filing US tax returns on their worldwide income, and Medicare generally doesn’t pay for care outside the US. Social Security can be paid in most countries. The money decisions are about four things: health insurance in the new country, two tax systems, keeping your accounts usable from abroad, and living on income in dollars while spending in another currency.
US taxes don’t stop at the border
The IRS taxes citizens and resident aliens on income from all sources, wherever they live. What changes when you move:
- Two returns. Your new country may tax you as a resident too. A foreign tax credit, and any tax treaty between the two countries, can stop the same income being fully taxed twice, but the rules differ for each country and each type of income: pensions, Social Security, IRA withdrawals, Roth withdrawals.
- The foreign earned income exclusion doesn’t help most retirees. It covers pay for work, not pensions, annuities or Social Security, interest or dividends.
- More time to file. If you live abroad on the regular due date, you get an automatic two-month extension, to June 15.
- Reporting foreign accounts. Two separate filings apply once your foreign accounts pass set amounts.
Filing thresholds for US taxpayers living abroad
Source: IRS, Comparison of Form 8938 and FBAR requirements (September 2026)
The FBAR is filed with FinCEN, the Treasury’s financial crimes office, not with your tax return. Form 8938 goes with the return. A local bank account for rent and bills will usually pass the FBAR line quickly.
State taxes are a separate question. Moving abroad doesn’t automatically end your old state’s claim on you. Some states look at where you keep a home, a driver’s license, voter registration and bank accounts. Cutting those ties, and keeping evidence that you did, matters most if you’re leaving a high-tax state.
Social Security and Medicare abroad
Social Security. US citizens can generally keep receiving benefits abroad. Treasury rules withhold federal payments to Cuba and North Korea, and Social Security has further limits for some countries and for non-citizens. Check your destination with Social Security before you move.
Medicare. Federal law bars Medicare from paying for care outside the US, apart from narrow cases tied to inpatient hospital stays. Medigap Plans C, D, F, G, M and N cover 80% of emergency care during foreign travel, up to plan limits, which helps on a trip but isn’t a health plan for living abroad. You’ll need insurance or public coverage in your new country.
The Part B decision. If you’ll come back to the US for major care, or might move back, keeping Part B, at least $202.90 a month in 2026, keeps that option open. If you drop it and sign up again later, you may have to wait for the General Enrollment Period, January 1 to March 31, and pay a penalty of 10% of the premium for each full year without it, for life. Ten years abroad could mean paying double the standard premium on return. Part A is premium-free for most people, so there’s usually no reason to drop it.
Keeping your money usable from abroad
- US accounts. Some US brokerages and banks restrict or close accounts for customers with foreign addresses, or limit what they can buy. Ask your custodian, in writing, what happens when you change your address, before you move.
- Foreign funds. A mutual fund or ETF bought from a local bank abroad is usually a passive foreign investment company, or PFIC, in US tax terms. PFICs are reported on Form 8621 and taxed under special rules that are usually costly. Most Americans abroad are better off keeping investments in US-registered funds.
- Currency. If your income is in dollars and your rent is in euros or pesos, a 20% fall in the dollar is a 20% cut in your standard of living. A plan should hold some spending money in the local currency and test your budget at weaker exchange rates.
- Your advisor. Some US-registered advisers can’t serve clients in certain countries because of local rules. Ask whether yours can keep working with you after you move.
Estate and paperwork
A US will may not be recognized, or may not control local property, in your new country, and some countries have inheritance rules that override a will. Update beneficiary designations and powers of attorney, and ask whether you need a local will for local property. An estate attorney in each country is usually needed for this part.
Common mistakes
- Assuming the move ends US tax filing. It doesn’t, and missed FBARs carry penalties.
- Buying local investment funds. They’re often PFICs.
- Dropping Part B without a plan for coming back.
- Keeping ties that leave your old state taxing you.
- Budgeting at today’s exchange rate.
- Telling your brokerage last. An account restricted after the move is harder to fix from abroad.
Questions to ask a planner
| Ask | A good answer includes |
|---|---|
| How will each of my income sources be taxed, in both countries? | Pensions, Social Security, IRA and Roth withdrawals, under the treaty if there is one |
| Can you keep advising me after I move? | A direct yes or no for your destination country |
| Will my brokerage keep my accounts open? | The custodian’s written policy |
| Should I keep Medicare Part B? | The premium against the penalty, for your plans to return |
| How do I protect my budget against the exchange rate? | A currency reserve and a stress-tested budget |
When a fee-only advisor is worth it, and what it costs
This is a move where an hour of the right advice can save years of tax filings gone wrong. Look for a planner who already has clients in your destination country, and plan to pair them with a tax preparer who files US returns for Americans abroad. A fee-only planner isn’t paid by any fund or insurance product they suggest.
A one-time plan costs a median $2,000 (middle half $845 to $3,600), and hourly planners a median $300, which suits a first conversation about whether a country works. Ongoing planning runs a median $4,500 a year. International work often costs more than a domestic plan, so ask for the price in dollars before you start.
How to find one
Start with the tax planning and retirement planning specialties, or advisors for retirees and pre-retirees. If you’re moving to Canada, the cross-border specialty, the cross-border families page and our guide to US and Canada planning cover the treaty in detail. If you’re still setting a date, read when you can retire.