Could a Stint Abroad Help You Retire Earlier?

While recent stock market returns have buoyed the hopes of those dreaming of financial independence, the well-publicized retirement math can make it seem far away for many. The oft-cited 4% withdrawal rule of thumb has some daunting math attached to it. If your current expenses are $8,000 a month, for example, it would imply a portfolio of $2.4 million to support that spending, before accounting for taxes. That's far beyond the typical retirement account balance.

Of course, I'm omitting a huge piece of the puzzle: Social Security, which can be taken as early as 62, although that's rarely the wisest plan. But for those in their 50s and early 60s who are burned out or see their work opportunities dry up, retirement may still seem years away. There's also the challenge of paying for health insurance before Medicare, when premiums can be particularly painful.

Where you live can change the math as much as how much you save. When my family and I spent a year in France, we met many Americans living there, many of whom were well below traditional retirement age. Some had retired early, while others were using a lower-cost country as a bridge between their working years and Medicare and Social Security. The cost of living can certainly be lower overseas, but the bigger opportunity is that you can structure your life differently. Replicate your American lifestyle — with a 2,500-square-foot house and a large yard — and you may not save nearly as much as you'd hoped. Live in a smaller apartment near the center of town, walkable and transit-connected, and the math changes. A couple who needs two cars in suburban America may need one, or none, in a walkable European city — eliminating not just gasoline or electricity, but insurance, maintenance, parking, depreciation and the eventual cost of replacing the vehicle.

Healthcare is one of the largest wildcards in this calculation. For couples in their 50s and early 60s, health insurance can be one of the largest expenses outside of housing. A $1,600 monthly premium for a high-deductible plan can put a serious wrench in your financial independence plans, and that math has only gotten less forgiving since enhanced ACA premium tax credits expired at the end of 2025. Moving abroad doesn't automatically solve the problem — you need to understand residency requirements, eligibility and insurance coverage. International health insurance plans can be considerably less expensive than US policies, and some countries also have public or private health systems available to residents at a lower cost. But don't compare premiums without comparing the coverage: deductibles, exclusions, coverage limits and, particularly, pre-existing condition provisions can make a less expensive policy a very different product.

Renting out your US home can help fund your life abroad. If your mortgage is paid off, or you have built substantial equity, rental income may cover much of your living expenses overseas. With a capable property manager, your home could provide enough net income to meaningfully move you toward financial independence while preserving a place to return to if the adventure doesn't work out.

Pick the right stage of life. The payoff may be greatest for someone who wants to retire early but isn't quite financially independent yet. Jobs tend to pay more in the US, so working and saving here before moving abroad could make sense. If your children are grown and out of the house, you're also less likely to disrupt their education or social lives — although living abroad can be a learning experience they'll never forget. Many countries, including Portugal and France, offer residency paths based on retirement income or financial resources, while visas that offer the opportunity to work can be tougher to secure.

I'm not suggesting everyone should pack their bags. Long-term visas, managing investments and potentially two tax systems, navigating a foreign bureaucracy, and being far from family and friends are real costs of their own. But if financial independence is your goal, where you choose to live can be one of the biggest variables in the equation. A move overseas doesn't have to be forever — for some, a few years abroad could be both an adventure and a financial bridge to the retirement they want.

David Gardner is a certified financial planner in Boulder County and is admitted to practice before the IRS. He can be reached at entreewealth.com. As financial planning is only possible after knowing the client, the column is not intended to be personal financial or tax advice. Data presented is believed to be accurate at the time of writing.