Can You Retire Abroad and Keep Your Benefits? What US Expats Need to Know

Which Benefits Continue Overseas?

Social Security: Payments continue in most countries (exceptions: Cuba, North Korea, and some others). Direct deposit to US or foreign bank accounts.

Medicare: Does NOT cover care outside the US (with very limited exceptions near borders). Expat retirees typically purchase international health insurance ($200-600/month depending on age and country) or use the local healthcare system.

Military retirement: Continues worldwide.

Federal pension (FERS/CSRS): Continues worldwide.

401(k)/IRA: Can withdraw from anywhere. Subject to US tax regardless of residence. Some countries also tax these distributions — check your country's tax treaty.

What Are the Tax Implications?

US citizens are taxed on worldwide income regardless of where they live. You must file a US tax return every year.

Foreign Earned Income Exclusion (FEIE): Excludes up to $126,500 (2025) of earned income. This applies to wages and self-employment income — NOT pension, Social Security, or investment income. So it mainly benefits expats still working.

Foreign Tax Credit: If you pay taxes to your host country, you can credit those taxes against US tax liability. This prevents double taxation in most cases.

FBAR: If your foreign financial accounts exceed $10,000 at any point during the year, you must file FinCEN Form 114. Penalties for non-filing are severe ($10,000+ per account per year).

FATCA: Your foreign bank will report your account to the IRS (most countries have agreements). Don't assume offshore accounts are invisible.

Want to Model an Overseas Retirement?

The analysis at myaifinancialplan.com can model the financial impact of retiring abroad — including FEIE, Foreign Tax Credits, healthcare cost differences, and cost-of-living adjustments. Start free at myaifinancialplan.com.