When Allan Fawcett decided to retire from computer science in 2011, he knew he wanted to spend at least a few years traveling, especially around Europe. As he put it, after decades in the tech industry, he was ready to give his brain a break. “Computer programming destroyed my brain,” he said wealth. “I need to escape.”
Little did he know, this escape would become permanent. Shortly after retiring, he met his now-wife Elizabeth, with whom he eventually moved permanently to Spain.
Fawcett, now 67 and a resident of Spain through marriage, is delighted with his decision. Although his wife still works, he spends his days playing tennis, reading, and going to the beach or cafés with expat friends in Barcelona. He and his wife were able to travel around the continent and even plan to travel to Paris to watch the Olympics this year.
Fawcett said the same lifestyle was not possible in the United States. Housing is much cheaper, food is cheaper, alcohol is even cheaper. The mass transit system was a godsend; Fawcett didn’t own a car and didn’t need one to get around. Walkability is also a major benefit.
“Life is good here,” said Fawcett, a resident since 2019. Everything is very cheap.
Fawcett is one of a growing number of retirees, driven by America’s retirement crisis, choosing to move abroad rather than spend their golden years in the United States. Information on 700,000 people receiving Social Security benefits abroad comes from the Social Security Administration. In 2000, the number was less than 400,000.
Some people emigrate because they simply cannot live comfortably on a fixed retirement income in the United States, especially as housing and medical costs become increasingly unaffordable. In the United States, a large number of retirees rely almost entirely on Social Security payments to make ends meet, averaging about $1,900 per month. Increasingly, older Americans are living in poverty with limited, if any, access to social services.
Others have always dreamed of traveling and immersing themselves in other cultures. Others can afford to stay in the United States but realize they can make more money abroad.
“It cost us next to nothing”
The latter was true for Susan Keenan Sweeney and her husband Joe, who moved to Hungary in 2015 (Jo was born in Hungary but moved away as a child) . Although Sweeney, 69, had a distinguished career in U.S. banking software and even took early retirement in Florida, rising housing and health care costs kept her out.
When she and her husband visited Hungary before moving, they saw the affordable cost of living and slower pace of life and decided to move almost “on a whim.” They now own a house in the countryside about two hours’ drive from Budapest, surrounded by vineyards. Visit Sweeney Gardens to sample seasonal fresh produce from nearby markets and make jams and jellies at home; the couple spent the winter in Spain and traveled extensively throughout Europe during the rest of the year.
Courtesy of Susan Keenan Sweeney
Sweeney also points to the extensive public transport system as a major plus – it’s free for those over 65 and there’s a train station at the bottom of the hill where they live – as is the sense of safety and community they feel. She said 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. One of their biggest monthly expenses is a US Hulu subscription, which they watch through a VPN.
“I think I’m on the forefront of where to retire,” Sweeney said. “It costs us next to nothing to live here.”
Trade-offs of living abroad
Of course, there are disadvantages. The rest of Sweeney’s family is in the United States, so they need to plan travel to visit each other. Cultural differences can be difficult to manage, at least at first, and Sweeney is still learning the basics of Hungarian. Fawcett pointed out that the level of personal wealth in Spain is different from that in the United States. Typical salaries are much lower than the six-figure jobs you can find in the United States. Of course, the income tax burden is much higher.
Sweeney and Fawcett would not have been able to save as much money during their high-paying careers in the United States if they had spent their careers in Europe. Most of their investments remain in U.S. financial institutions due to difficulties in transferring them. There’s a lot of other bureaucracy and red tape you need to jump through if you want to move overseas. Sweeney and her husband hired an attorney to help them purchase the home;
“The most important thing in the first few years is to deal with the bureaucracy,” Fawcett said. “Anything you want in Spain requires a lot of paperwork.”
But Fawcett believes that for the broader population, living standards are much better than in the United States. There are also little things like fresher, cheaper groceries and more affordable, more accessible concert tickets. And then there are the bigger benefits, like months of paid maternity leave, cheap secondary education and affordable health care.
Courtesy of Susan Keenan Sweeney
“This is not America,” Sweeney said. “They do things differently here and that’s why we’re here.”
While universal health care systems like those in Hungary and Spain are often criticized for long wait times and the potential for providing substandard care compared to the United States, both Fawcett and Sweeney are pleased with the standard of care they receive, This includes surgical procedures and major surgeries such as colonoscopy. One drawback is that many providers don’t necessarily speak English; Sweeney said that in the event of a major event, they would consider flying back to the United States for treatment due to the language barrier.
“If you walked in here as an American and went to the doctor’s office, I would have to pick you up off the floor,” Sweeney said of the culture shock. “Nothing involved with insurance. Walk in, see the doctor, and walk out.
Betterment investment director Mindy Yu warns people interested in retiring abroad to take the time to plan for considerable financial, legal and logistical pitfalls.
“It is important to avoid viewing retirement abroad as a cheaper option and instead start saving as early as possible while diversifying your portfolio to avoid risks,” Yu said. “Consulting with a tax professional with international expertise is critical because living abroad may also create new tax obligations in the United States and your new country of residence.”
Fawcett plans to stay in Spain with his wife, especially since she is the caregiver for her 91-year-old mother and raise their children in the area. Sweeney also said that she and her husband will stay in Hungary for the long term, although they may eventually move from the Vineyard to Budapest.
“I would urge anyone who wants to do that to go on vacation, rent a house and look around. You’ll find yourself in some places you never dreamed of,” Sweeney said. “If you retire and you still have a few months to go, so what?”
