Things to know before you go

Los Angeles Times Staff Writers

Where are Americans retiring?

Mexico is the most popular destination, because of its proximity to the U.S. and the large number of Mexican Americans looking to return to their roots. Costa Rica, Ecuador and Panama form the next tier of favorites, according to the AARP, the advocacy group for about 39 million Americans aged 50 and over.

What's the cost of living?

It depends. Most households interviewed for these articles said they live comfortably on $1,500 to $2,500 a month. That doesn't include housing because most bought their homes outright. But it does include maid and garden service, entertainment and occasional meals out. You can spend less -- or much more -- depending on your lifestyle and means.

Can I own property?

Yes. But you need to do your homework. In Mexico, for example, foreigners can buy land near the coast only through a special bank trust or a Mexican corporation. Title problems are rampant in Latin America. Most deals are in cash. Invest in legal advice.

Do I need a visa?

Yes. They take various forms, depending on whether you're working or retired. But anyone planning to reside in a foreign country needs permission from immigration authorities in the host nation. Some expatriates string together long-term stays using multiple tourist visas. This isn't advised because officials could turn you away at any time.

Can I work?

Yes. But to do it legally takes some doing. Many countries have high unemployment and don't want foreigners to take jobs from locals. Salaried expats working for a U.S. company or a firm in the host country need a work visa. Self-employed foreigners should do the same, but many don't. If your business is of any size, legalizing it is the way to go. It can be costly and time-consuming, but you won't be worried about a tax crackdown or immigration sweep.

What about taxes?

American retirees in Mexico, Costa Rica and Panama generally are not taxed by those governments on pensions, Social Security and similar income earned in the U.S.

However, you're not off the hook with the Internal Revenue Service. U.S. citizens abroad must file U.S. tax returns, even if they have no tax liability. If you earn income while living abroad, the U.S. will exclude as much as $85,700 from federal taxes in 2007 (double that for dual-income married couples). Money you earn from sources in your host country generally is taxable there. Get a good tax advisor in both countries.

Property taxes typically are much lower in Latin America than in the U.S. But other taxes are quite steep. For example, taxes on vehicles brought into Costa Rica can reach 79%.

What about healthcare?

Your U.S. Medicare isn't valid abroad. Still, experts advise retirees to keep current with Medicare Part B premiums so they can return to the U.S. for treatment. Some expats buy insurance to cover emergency medical evacuation to the United States.

Countries including Mexico and Costa Rica allow foreign residents to buy coverage in their national healthcare systems. These low-cost plans are a good safety net. But most expats buy private insurance too. Start checking out plans before you relocate to avoid nasty surprises such as age limits and fat deductibles.

Some expats prefer to simply pay out of pocket. The good news is that there are many first-rate hospitals that provide care for a fraction of what you would pay in the U.S. The same is true for dental care and prescription drugs.

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