Retiring abroad as a lower-income American means your Social Security stays the same, but your dollars stretch further — and your tax bill, healthcare costs, and benefit rules change in ways that matter.

If you retire outside the United States, Social Security payments continue to your bank account, but Medicare does not follow you. Your income may face U.S. tax on worldwide earnings, and some countries tax you as a resident too. The cost of living drops in many places, which is why people move, but you lose access to programs like Supplemental Security Income (SSI) and Medicaid after you leave. The financial picture depends entirely on where you go, what income you have, and whether you keep U.S. citizenship.

This guide walks through what actually changes when you move: which benefits travel with you, which stop, how taxes work in two countries at once, and what it costs to maintain healthcare and legal status abroad.

Key Takeaways

  • Social Security payments continue overseas, but you must report your address to the Social Security Administration and may face periodic in-person verification depending on the country.
  • Medicare does not cover care outside the U.S. except in limited cases, so you will need to buy private health insurance or use the local healthcare system in your new country.
  • You remain subject to U.S. income tax on worldwide earnings, and many countries also tax residents on their income, potentially creating a double-tax situation unless a tax treaty applies.
  • Supplemental Security Income (SSI) and Medicaid stop when you leave the U.S., which affects lower-income retirees who rely on these programs.
  • Visa and residency rules vary by country and affect how long you can stay, whether you can work, and what documentation you need to maintain legal status.

How Social Security and Supplemental Income Work Abroad

Social Security retirement benefits continue to be paid to your U.S. bank account or mailed to a foreign address if you move. You must notify the Social Security Administration of your new address within 10 days of moving. The agency tracks your location and may require you to appear in person at a U.S. embassy or consulate every few years to verify you are still living and still may have access to to benefits — the frequency depends on the country where you live.

Supplemental Security Income (SSI) is different: it stops the month you leave the United States. SSI is a needs-based program for people 65 and older or with disabilities who have limited income and resources. Once you move abroad, you are no longer considered a U.S. resident for SSI purposes, and payments end. If you return to the U.S., you can reapply, but there is a waiting period. For lower-income retirees who depend on SSI to reach the poverty line, this loss is significant and permanent.

Supplemental Nutrition information Program (SNAP) benefits also end when you move abroad. Unlike Social Security, these programs are designed for people living in the U.S., and residency is a requirement to receive them.

Medicare Coverage and Healthcare Costs Overseas

Medicare does not cover medical care outside the United States, with rare exceptions for care in Canada or Mexico that is closer to your home than U.S. care. If you retire abroad, you lose access to Medicare Part A (hospital insurance) and Part B (doctor visits) for any care you receive in your new country. You can keep your Medicare enrollment to avoid penalties if you return to the U.S. later, but you will not use it while abroad.

Your healthcare options abroad depend on your new country's system. Some countries offer public healthcare to residents after a waiting period; others require private insurance. Many lower-income Americans choose countries with low-cost healthcare systems — Thailand, Mexico, and Portugal are common choices — where a private health insurance policy costs $50 to $150 per month and a doctor visit costs $20 to $40. However, you must research the specific country's requirements before moving. Some nations require proof of health insurance before granting a residency visa.

Expat health insurance plans exist specifically for Americans living abroad and typically cost $100 to $300 per month depending on age and coverage level. These plans cover emergency care, routine visits, and sometimes dental and vision. They do not cover pre-existing conditions in the same way U.S. insurance does, so read the policy carefully. If you have chronic conditions like diabetes or heart disease, insurance costs rise, and some conditions may be excluded for a waiting period.

U.S. Income Tax on Worldwide Earnings

U.S. citizens and permanent residents must file a federal income tax return every year on worldwide income, regardless of where they live. This applies to Social Security benefits, pensions, investment income, and any work income. The tax rules do not change because you moved — you still owe tax on the same income you would owe tax on in the U.S.

However, the Foreign Earned Income Exclusion (FEIE) allows you to exclude up to $120,000 of earned income (wages from work) from U.S. tax if you meet the Physical Presence Test or Bona Fide Residence Test. Social Security is not earned income, so this exclusion does not help with retirement benefits. The exclusion applies only to income you earn by working abroad, not to pensions or investment returns.

Many countries also tax residents on their income. If you become a tax resident in your new country — which usually happens after you live there for 183 days in a calendar year — you may owe income tax to that country as well. This creates a double-tax situation unless a tax treaty between the U.S. and that country prevents it. The U.S. has tax treaties with over 60 countries that reduce or eliminate double taxation. You can claim a Foreign Tax Credit on your U.S. return for taxes paid to another country, which reduces your U.S. tax bill dollar-for-dollar (up to the amount of U.S. tax owed). You must file Form 1040 and Form 1116 (Foreign Tax Credit) to claim this credit.

Lower-income retirees with only Social Security income may owe little or no U.S. federal tax because Social Security has a high standard deduction. However, if you have other income — a pension, rental income, or investment returns — your tax situation becomes more complex. You will need to file a U.S. return every year and may need to file a return in your new country as well.

Visa and Residency Requirements by Country

How long you can stay abroad depends on the country and the type of visa you hold. Some countries offer retirement visas specifically for people over 55 or 60 with a minimum monthly income. Mexico requires a monthly income of around $2,700 or savings of $42,000 to may have access to for a temporary resident visa; Portugal requires about €1,000 per month for a D7 passive income visa. These amounts vary and change yearly, so you must check the current requirements with the country's embassy or consulate.

Other countries allow you to stay on a tourist visa for 30 to 90 days and then leave and re-enter to reset the clock — a practice called "visa runs." This works in some Southeast Asian countries but is not reliable long-term and may be restricted. Many countries now require proof of health insurance and a police clearance before granting a residency visa.

If you do not have a visa or overstay a tourist visa, you can be deported and banned from re-entering. You must understand the rules of your chosen country before moving. The U.S. State Department website lists visa requirements for every country, and most countries' immigration websites have English-language sections explaining residency options.

Cost of Living and Purchasing Power

The reason many lower-income Americans retire abroad is that their money goes further. A Social Security check of $1,500 per month may cover rent, food, utilities, and healthcare in Thailand or Mexico but not in the United States. However, cost of living varies widely by country and by city within a country. Chiang Mai, Thailand is cheaper than Bangkok. Playa del Carmen, Mexico is more expensive than smaller towns in Oaxaca. You must research the specific place you plan to move, not just the country.

Costs also rise over time. Inflation in your new country, currency exchange rate changes, and your own aging can all increase your expenses. If you retire on a fixed Social Security income, a 5 percent annual inflation rate in your new country means your purchasing power drops by half in 14 years. Some countries have higher inflation than the U.S.; others have lower. You should plan for your income to buy less over time, not more.

Housing, food, and local transportation are usually cheaper abroad. Healthcare, imported goods, and utilities can be expensive depending on the country. Internet and phone service are often cheaper than in the U.S. Traveling back to the U.S. to visit family is an ongoing cost that many retirees underestimate.

Banking, Currency Exchange, and Money Transfer

Social Security payments can be deposited directly into a U.S. bank account, and you can withdraw money abroad using an ATM card. However, ATM withdrawals abroad often carry fees from both your U.S. bank and the foreign bank — typically $2 to $5 per transaction. If you withdraw money frequently, these fees add up. Some banks offer checking accounts with no foreign ATM fees; others charge $3 per withdrawal.

Currency exchange rates fluctuate daily. If the U.S. dollar weakens against your new country's currency, your money buys less. If it strengthens, your money buys more. Over a 20-year retirement, exchange rate swings can significantly affect your purchasing power. You cannot control exchange rates, but you can plan for them by keeping some savings in U.S. dollars and some in your new country's currency.

Some retirees open a local bank account in their new country to avoid repeated ATM fees. This requires a local address, identification, and sometimes proof of income. Many countries require a minimum deposit to open an account. Once you have a local account, you can transfer money from your U.S. bank using services like Wise (formerly TransferWise), which offers better exchange rates than banks. A wire transfer typically costs $15 to $50 and takes 1 to 3 business days.

Legal and Tax Filing Obligations

U.S. citizens abroad must file a federal income tax return every year, even if they owe no tax. You file Form 1040 by the normal April 15 important date (or October 15 if you request an extension). You must also file the Foreign Bank Account Report (FBAR) if you have more than $10,000 in foreign bank accounts at any time during the year. This form is filed separately with the Financial Crimes Enforcement Network (FinCEN) by April 15. Failure to file the FBAR carries steep penalties, even if you owe no tax.

If you have significant income or assets abroad, you may also need to file Form 8938 (Statement of Specified Foreign Financial Assets) with your tax return. The threshold depends on your filing status and whether you live abroad. A tax professional who works with expats can help you understand your obligations. The cost of hiring a tax preparer who handles expat returns is usually $500 to $1,500 per year, which is a real expense to budget for.

You must also maintain your U.S. address with the Social Security Administration, the IRS, and any other agencies that send you mail. Some retirees use a mail forwarding service in the U.S. ($10 to $20 per month) to receive important documents and forward them abroad.

Frequently Asked Questions

Can I collect Social Security if I move to any country?

Social Security pays to most countries, but a few are restricted: Cuba, North Korea, Iran, Syria, and Crimea. If you move to a restricted country, payments stop. Some countries also require periodic in-person verification at a U.S. embassy, which can be difficult if you live far from one. Check with the Social Security Administration before moving to confirm your country is not restricted.

What happens to my Medicare if I move abroad?

Medicare stops covering your care once you leave the U.S. You can keep your enrollment to avoid penalties if you return later, but you will not use it while abroad. You must arrange private health insurance or use your new country's healthcare system. Some countries offer public healthcare to residents after a waiting period of 3 to 12 months.

Do I have to pay taxes to two countries?

Yes, unless a tax treaty prevents it. The U.S. taxes citizens on worldwide income, and your new country taxes residents on their income. A tax treaty between the two countries may reduce or eliminate double taxation. You can claim a Foreign Tax Credit on your U.S. return for taxes paid abroad, which reduces your U.S. tax bill. A tax professional can help you understand your specific situation.

How much money do I need to retire abroad?

This depends on the country and your lifestyle. In low-cost countries like Thailand or Mexico, $1,500 to $2,000 per month covers housing, food, utilities, and healthcare. In higher-cost countries like Portugal or Costa Rica, you may need $2,500 to $3,500 per month. Many countries require proof of monthly income or savings before granting a residency visa. Research your specific country's requirements and cost of living before deciding.

What if I want to return to the U.S.?

You can return at any time. Social Security continues to pay, and Medicare resumes coverage once you are back in the U.S. If you were receiving SSI before you left, you can reapply, but there is a waiting period. You will need to re-establish a U.S. address and update your information with the Social Security Administration. Plan for the cost of moving back, which includes travel, housing deposits, and any healthcare gaps while you re-enroll in Medicare.