I’m 57 years old and worried about running out of money in retirement. Moving abroad might be the best bang for my buck, but I’ve never left America — should I do a trial run?

Consider a trial run

According to the Association of American Residents Overseas (AARO), an estimated 5.4 million U.S. residents live abroad as of 2023.

But leaving the country can conjure a variety of conflicting feelings and concerns, including questions around medical care and any legal and tax implications of buying a home abroad.

Therefore, you don't want to commit to a drastic lifestyle change until you've had the experience of living in your chosen locale on a trial basis.

This usually means you'll need to do a lot more than just take a two-week trip and play tourist.

In order to get a feel for what it’s like living in another country, consider renting or subletting an apartment in your dream city for several months. If you can swing it, do it more than once — perhaps during a different time of year to compare seasonal changes.

When there, partake in everyday mundane tasks, such as grocery shopping, using public transportation, driving around, and looking into a local doctor and maybe even a lawyer.

You can compare the cost of living in cities across the globe via Numbeo’s cost-of-living database, in addition to the Global Passport Index, which factors in cost of living, infrastructure, and personal and political freedoms.

If you don't personally know anyone who has retired abroad, visit online message boards in search of personal experiences described by others who have taken the leap — especially if you manage to track someone down from the city or town you plan to move to.

Ideally, you’d undertake this trial run shortly after retirement. Don’t sell any property or make any other major moves until you’re absolutely certain you’re ready to leave the U.S.

If you’re concerned about income while living abroad for a couple months during your trial run, consider renting out your home for some financial padding.

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Investigate the rules and requirements

There are also rules and requirements in both the U.S. and your dream destination that need to be taken into consideration.

In most locales, you’re likely to encounter certain visa and residency requirements. For example, Costa Rica, Portugal, and Mexico, rank in the top three desired locales, according to International Living’s 2024 Global Retirement Index — and each have their own set of guidelines.

The Department of State also features information pages that can help you find the rules and regulations in various countries around the world.

The good news is that many popular retiree destinations have special retirement visas, although there are usually income requirements to qualify for them. You'll also have to find out what the rules are for owning property, securing medical care, and opening a foreign bank account.

One big consideration is housing. Consider any legal and tax implications of buying a home abroad.

For some, it may make more financial sense to rent instead of buy. If you’re still on the fence about officially leaving the U.S. for the long-term you could also hang on to your American home (and rent it out) while subletting an apartment abroad for a longer trial run.

In most situations, Medicare won’t cover you while living abroad. Therefore, you’ll need to find out if the country has universal health care or if you’ll need to consider private coverage.

As for your U.S. obligations, you'll likely still have American taxes to pay as long as you remain a citizen.

You may owe the taxman in the U.S. and pay taxes in your new home country — although the U.S. does have some tax treaties to prevent double taxation. That being said, navigating the murky waters of multi-jurisdictional tax rates can only further complicate matters.

According to the IRS tax guide for Americans living internationally, “if you are a U.S. citizen or resident alien, your worldwide income is generally subject to U.S. income tax, regardless of where you are living.”

Finally, retiring abroad can be difficult if you’re leaving behind loved ones. It can be difficult to build a social network, especially if you don’t speak the language. It’s also not uncommon for new retirees to struggle with retirement blues.

According to a study from the National Library of Medicine, retirees are more likely to experience depression compared to older Americans still in the workforce.

Since retirement is already a major life adjustment, completely uprooting your life to live in another country — especially if you’re already balking at the idea of building a brand new social network — might be one big step too many.