Some people are worried about the future of the U.S. dollar and they believe that moving from the States is a way to distance themselves from its possible decline.
Well, yes and no. While diversifying your asset holdings by currency is often a wise move, the truth is that if you're a U.S. citizen you'll never be able to walk away from the dollar completely -- even if you move overseas. Likewise if you're a Canadian or citizen of any other country -- it's hard to totally divorce yourself from your national currency.
Here are two reasons why...
One. You can't divorce the tax man... no matter how irreconcilable your differences. If you're a U.S. citizen you are obligated to file your annual tax returns, no matter where in the world you choose to live or work.
If this means you'll owe money to the IRS then you'll need to pay that nut in good old greenbacks. If you're lucky enough to get money back, it will be sent to you in good old greenbacks.
(You can't have it directly deposited to a foreign account -- only to bank accounts located in the U.S. For information about getting your Social Security payments sent to you outside the U.S., read this. And Canadians, this is for you.)
Two. If you rely on credit cards... even if only for emergencies... it may be difficult to get one in a foreign country unless you have an established credit history there. So when you move overseas you'll want to hang on to your U.S.- or Canadian-issued credit cards. And, of course, you'll need to pay those credit card bills with your national currency.
Most expats we know maintain a bank account at home for just these reasons. They may not leave a lot of money in it, but enough to pay debts like credit cards, taxes, life or health insurance policies, etc. For emergency purposes, you may want to have a debit card attached to this account.
When you're preparing to move overseas it's a good time to assess your personal financial situation. Decide if your current bank and current credit cards are the best for an expat.
Here's what to consider: many banks issue debit cards that come with a hefty "foreign transaction fee" or "foreign currency exchange" fee. Same with credit cards. These fees can add up. Withdraw 3,800 pesos in Mexico or 150,000 colones in Costa Rica, for instance -- about $300 USD -- and you may end up paying $15 or more in fees.
The solution is obvious: look for banks and credit card companies that don't charge these fees and move your accounts there before you leave home. (We've opted for Capital One.) And remember to choose financial providers with easy-to-use online banking interfaces.
If you're planning to move to a foreign country, managing your personal finances is a critical issue. And, of course, there are other issues you'll need to address: like taking your pets or household goods with you... the best residency visa for your personal situation... how to find a job, open a bank account, etc.
But don't worry. You'll find lots of the information out there to help you make your overseas move as enjoyable and pain-free as possible.
And the best advice is to always ask questions -- and if you get an answer you don't like, ask someone else. You'd be surprised how many rules, regulations, rates and fees are open to interpretation and negotiation.
Ecuador may be one of the most inexpensive places to live for retirees on a budget. Not only is the cost of living extremely cheap, according to Fortune magazine, but the South American country also uses the U.S. dollar. One couple interviewed by International Living lived on $600 a month, spending as little as $1.25 per month on gas and $1.70 per month on water. (Image via Flickr, Carly Lyddiard) Correction: A previous version of this slide said that Ecuador was in Central America.
Easy accessibility and excellent health care are two major draws for retirees settling in Panama. According to U.S. News & World Report, the cost of living is not the cheapest -- especially in Panama City -- but the great retirement benefits, travel and entertainment discounts and country-wide use of U.S. currency make up for the extra expenses. (Image via Flickr, Francesco Veronesi)
Since 1985, 25,000 foreign retirees have settled in the Philippines, Global Post reports. Taxes are minimal, so living is very comfortable on a pension of $3,000 per month. Post 50s may have to share the beach with younger folks since the minimum age for ex-pat retirees is 35.. (Image via Flickr, SToto98)
For a tropical climate where English is the official language, retirees should look no further than Belize. The coastal country offers no tax on foreign retirement income and minimal sales and property taxes, according to U.S. News & World Report. (Image via Flickr, Ian Morton)
Some cities in France may be a bit out of the price range of the average retiree -- looking at you, Paris -- but the monthly expenses of other towns in the southwest are more affordable, notes the AARP. For Francophiles looking to settle in France, the history, culture, wine and food are among the biggest enticements. (Photo credit: AP)
With consistently perfect weather and beautiful beaches, Bali joins dozens of other beachfront locations that make for great retirement living. According to The Wall Street Journal, retirees can settle down on the Indonesian island for about $1,000 a month (not including housing), as long as they don't mind trading in a front door for a open entryway -- as is custom in Bali. However, medical care is not the best. (Photo credit: Getty)
With no taxes on foreign retirement income -- according to U.S. News & World Report -- Costa Rica may be one of the ideal places to retire. Nestled between Nicaragua and Panama, the cost-friendly country boasts stunning beaches and rain forests. HuffPost bloggers Jeff Jones and Gay Haubner wrote about their experience finding a house in Costa Rica. (Image via Flickr, Dottie Day)
No list of places to retire abroad could be complete without Italy, where Diane Lane's character traveled to in the 2003 film "Under the Tuscan Sun." Settling in Rome is not the most feasible option, but like France, there are several Italian cities that offer a comfortable life of leisure, full of delicious Italian food and wineries, on a budget, AARP reports. (Image via Flickr, Russell Yarwood)
Certain cities in Mexico are not the safest, especially along the U.S.-Mexico border, but there are still parts of the southern country that are increasingly popular with retirees. Campeche, located near Belize, boasts beautiful waterfront properties on the Gulf of Mexico and a low cost of living. A week's worth of market fruit and vegetables cost less than $10, according to International Living. (Photo credit: Flickr/Malias)
While taxes are a bit higher in Argentina than other South American locales according to U.S. News & World Report, the large country offers a wide range of places to settle -- from major tourism hubs to smaller, inexpensive villages. However, retirees should plan on spending a little more on monthly expenses, because of the rising cost of living and devaluation of the U.S. dollar, U.S. News & World Report writes. (Image via Flickr, Luis Fernandez)