When Allan Fawcett decided to end his career as a computer scientist in 2011, he knew he wanted to spend at least a few years traveling, especially in Europe. After decades of working in the tech industry, he was ready, as he puts it, to rest his mind. “Computer programming destroyed my brain,” he says. 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, even planning a trip to Paris for the Olympic Games This year.
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.
“It’s a great place to live,” says Fawcett, who became a resident in 2019. “You can eat outdoors everywhere, the weather is great. Everything is very cheap.”
Fawcett is part of a growing trend of retirees, spurred by The US Pension CrisisAs 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 move 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 on average about $1,900 per month. A growing share of Older Americans live in povertywith social services few and far between, if at all accessible.
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.
Courtesy of Susan Keenan Sweeney
Sweeney also points out that the extensive public transport network is a major asset.Its use is free for those over 65 years old.and there’s a train station at the bottom of the hill they live on, as is the sense of security 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. health insurance. 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. The level of individual wealth is not the same in Spain as it is in the United States, Fawcett points out. typical salary is much lower than the Six-figure jobs you can find in the United States. And of course, the income. the 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,” says Fawcett. “Everything 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.
Courtesy of Susan Keenan Sweeney
“It’s not like the States,” Sweeney says. “Here, things are different, and that’s why we’re here.”
And while universal health care systems While Hungarian and Spanish doctors are often criticized for long wait times and the potential for substandard care compared to the United States, Fawcett and Sweeney are both pleased 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 insurance paperwork. You go in, see the doctor, and walk out.”
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 not view retiring abroad as a cheaper option and to start saving as early as possible, while diversifying your portfolio to avoid risks,” says Yu. “It’s essential to consult a tax professional with international expertise, as living abroad can also come with new tax obligations, both for the U.S. and 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 encourage anyone who wants to do it 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?”
