How to Retire Abroad on a U.S. Salary: The Complete Cost of Living Guide for 2026

Every year, tens of thousands of Americans trade their stateside retirement for a life overseas. The reasons are compelling: a dollar that stretches further, a slower pace of life, warmer climates, and in many cases, access to affordable and high-quality healthcare. But choosing where to retire internationally requires more than wanderlust. It demands a clear-eyed understanding of cost of living, tax obligations, residency rules, and the financial mechanics of living on a fixed income in a foreign currency.

This guide breaks down the 10 most promising retirement destinations for 2026, ranked by their Cost of Living Index (COLI) relative to New York City (NYC = 100). Whether you are living on Social Security alone or drawing from a healthy 401(k), these comparisons will help you estimate your real purchasing power abroad and plan accordingly.

Why Americans Are Retiring Abroad

The math tells a stark story. The average monthly Social Security benefit in the United States sits around $1,900 as of early 2026. In many U.S. cities, that barely covers rent, let alone food, insurance, and transportation. Meanwhile, in cities like Medellín, Marrakech, or Buenos Aires, that same income can fund a comfortable middle-class lifestyle, complete with dining out, domestic help, and private healthcare.

Three forces are driving this migration in 2026:

• Purchasing power arbitrage. The U.S. dollar remains strong against most emerging-market currencies. A couple living on $3,000/month in rural Ohio might struggle, but in coastal Portugal or highland Mexico, that figure covers a spacious apartment, groceries, utilities, entertainment, and private health insurance with room to spare.
• Healthcare costs. Even with Medicare, out-of-pocket healthcare expenses in the U.S. can be devastating. Hip replacement surgery that runs $40,000 or more in the United States can cost a fraction of that in Thailand or Colombia, often at internationally accredited hospitals. Routine doctor visits and prescription medications are similarly affordable.
• Lifestyle and quality of life. Many retirees report that their overall well-being improves abroad. Walkable cities, fresh food markets, cultural richness, and strong expat communities create a retirement that feels less like winding down and more like starting over.

Top 10 Retirement Destinations Ranked by Cost of Living

The Cost of Living Index (COLI) below is measured against New York City at 100. A score of 40 means the city is roughly 60% cheaper than NYC across housing, groceries, transportation, utilities, and healthcare. Monthly budgets assume a couple renting a comfortable two-bedroom apartment in a safe neighborhood, including groceries, utilities, transportation, dining out twice a week, private health insurance, and miscellaneous expenses.

The Medicare Gap: Healthcare Outside the U.S.

One of the biggest misconceptions among prospective retiree expats is that Medicare will cover them abroad. It will not. Medicare does not pay for healthcare services received outside the United States, with very rare exceptions involving Canadian and Mexican border hospitals in emergency situations.

This means that if you retire abroad, you need to build a healthcare strategy from scratch. Here are the primary options:

• Local private insurance. Most countries on this list offer private health insurance plans specifically designed for expats and retirees. Premiums vary widely by age and country, ranging from $60/month in Morocco to $500/month in Thailand for comprehensive coverage.
• International health insurance. Companies like Cigna Global, Aetna International, and GeoBlue offer plans that cover you in multiple countries and can include U.S. coverage for visits home. These tend to run $300–$800/month per person but provide the broadest protection.
• Pay out of pocket. In the cheapest destinations, many retirees simply pay for routine care out of pocket and maintain a catastrophic-coverage policy. A doctor visit in Medellín might cost $15–$30, and a comprehensive blood panel under $20.
• Keep Medicare Part A. Even abroad, it can be worth maintaining Medicare Part A (which is premium-free if you have enough work credits) in case you return to the U.S. If you drop Part B and later re-enroll, you may face permanent premium surcharges of 10% per year for each full 12-month period you were not enrolled.

The best approach depends on your health, your destination, and whether you plan to visit the U.S. regularly. Many retirees combine a local plan abroad with maintained Medicare eligibility at home, creating a safety net on both sides of the equation.

Financial Planning: Estimating Required Income

The Cost of Living Index provides a useful starting framework, but translating it into a personal budget requires more granularity. Here is a step-by-step approach:

1. Establish your U.S. baseline. Calculate your current monthly spending in the U.S., broken down by category: housing, food, transportation, healthcare, entertainment, and miscellaneous. If you spend $4,500/month total in the U.S., that is your reference point.
2. Apply the COLI ratio. If your target destination has a COLI of 40 (roughly 60% cheaper than NYC), and your current city has a COLI of about 75, the relative adjustment is approximately 40/75 = 0.53. Your estimated monthly spending abroad would be around $4,500 x 0.53 = $2,385. Use salary-converter.com to compute these ratios accurately between specific cities.
3. Adjust for personal spending patterns. COLIs are averages. If you drink imported wine daily, your grocery costs will skew higher. If you skip car ownership (feasible in most cities on this list), your transportation costs will plummet. Build a line-item budget based on your actual habits.
4. Add a currency risk buffer. Even in countries with a pegged or dollarized economy (like Panama), you should maintain a 10–15% buffer for unexpected currency fluctuations, inflation, or emergency expenses. In countries with volatile currencies like Argentina or Turkey, a 20–25% buffer is prudent.
5. Factor in travel. Most retirees abroad fly home at least once or twice a year. Budget $1,000–$3,000 per person annually for flights, depending on distance. Nearby destinations like Mexico and Panama offer significant savings here over Southeast Asian or European alternatives.

Common Mistakes When Retiring Abroad

Even well-prepared retirees can stumble. These are the pitfalls that trip up newcomers most frequently:

• Buying property before renting. This is the single most common and costly mistake. Real estate laws, property rights, and market dynamics differ enormously from the U.S. Always rent for at least 6–12 months before considering a purchase. You may discover that the neighborhood you romanticized on vacation is too noisy, too remote, or too touristy for daily life. Renting first costs relatively little and can save you from a six-figure error.
• Underestimating tax obligations. U.S. citizens are taxed on worldwide income regardless of where they live. You will still need to file a U.S. tax return every year. The Foreign Earned Income Exclusion (FEIE) does not apply to pension or investment income, only earned income. Additionally, FBAR (Foreign Bank Account Report) requirements apply if your foreign financial accounts exceed $10,000 at any point during the year. Penalties for non-compliance are severe. Hire a tax professional who specializes in expat taxation.
• Ignoring currency risk. If your income arrives in U.S. dollars but your expenses are in Colombian pesos, Thai baht, or euros, you are inherently exposed to exchange rate fluctuations. A 10% swing in the wrong direction can erase your cost-of-living advantage. Strategies to mitigate this include holding expenses in a local-currency account, using services like Wise (formerly TransferWise) for favorable exchange rates, and maintaining a buffer fund.
• Neglecting estate planning. Your U.S. will may not be recognized or enforceable in your country of residence. Many retirees need a parallel estate plan: one for U.S. assets and one for foreign assets. Inheritance laws abroad can differ dramatically. In some countries, forced heirship laws override your wishes entirely.
• Failing to build a local network. The romance of living abroad can curdle into isolation quickly without a community. Prioritize learning the local language (even at a basic level), joining expat groups, volunteering, or taking classes. Loneliness is the silent killer of overseas retirements.
• Overestimating healthcare access. While the hospitals in major cities are often excellent, rural areas may have limited medical infrastructure. If you have chronic conditions requiring specialist care, verify that the specific specialists you need are available in your target city before committing to a move.

Your Pre-Retirement Abroad Checklist

Before booking that one-way ticket, work through these essential steps:

• Research visa and residency requirements for your top 2–3 destination countries. Verify income or asset thresholds.
• Consult an expat tax specialist about your specific situation, including FBAR, FATCA, and tax treaty implications.
• Use salary-converter.com to compare your current city's cost of living against target destinations and estimate your monthly budget abroad.
• Plan a scouting trip of 2–4 weeks to your top destination. Rent an apartment (not a hotel) and live like a local to test the reality.
• Secure international or local health insurance. Get quotes before you leave and understand coverage gaps, especially for pre-existing conditions.
• Decide on your Medicare strategy. At minimum, maintain Part A. Evaluate the long-term cost of dropping and re-enrolling in Part B.
• Open a bank account with a U.S. institution that offers low or zero foreign transaction fees (e.g., Charles Schwab, Fidelity). Research multi-currency accounts.
• Notify Social Security of your move and confirm that direct deposits will continue to your bank. Some countries have restrictions on direct deposit.
• Prepare estate documents for both the U.S. and your destination country. Update beneficiaries on all financial accounts.
• Downsize and digitize. Scan important documents, consolidate financial accounts, and decide what to ship, store, or sell.
• Build a 6-month emergency fund in U.S. dollars. This covers the transition period and protects against currency swings.
• Connect with expat communities online before you arrive. Facebook groups, InterNations, and local forums are invaluable for on-the-ground advice.

Make the Numbers Work Before You Move

Retiring abroad can be one of the most financially strategic and personally rewarding decisions you make. But it only works if the numbers add up. A destination that looks affordable on paper might surprise you with hidden costs, unfavorable tax treatment, or a currency that moves against you at exactly the wrong time.

The key is to ground your planning in real data. Know the cost-of-living index for your target city, understand how your specific income sources will be taxed, secure healthcare coverage before you need it, and always maintain a financial buffer for the unexpected.