11 Tax-Friendly Countries To Consider for Your Retirement

Just because you live in the U.S. doesn't mean you have to retire here. Many retirees are considering a move to another country.

There are plenty of reasons to retire outside American borders, including a better climate, saving money on travel, or potential tax breaks.

So, which countries are tax-friendly for American retirees? Here are a few places to consider if you're planning for retirement and want some extra cash in your pocket instead of paying taxes.

Portugal, on the west coast of Europe, has a comfortable climate and an affordable cost of living, which are attractive reasons to retire there.

You can be exempted from taxes on foreign income for 10 years, including pensions or real estate investments that may be part of your retirement portfolio. 

You can also get a D7 Passive Income Visa for your stay there, but you need to prove that you’ll have an income of almost $10,000 to apply for the visa.

Panama is popular with American expats for its climate, lifestyle, and use of the U.S. dollar as a recognized currency.

Panama doesn’t tax foreign-based income, so any money you may have from pensions, retirement funds, and other pieces of your retirement portfolio is safe from taxes. 

There's also a tax exemption for imported items like household goods and cars if you want to have those during your stay.

Check out the Asian nation of Malaysia, where you’ll find warm, sandy beaches, lush tropical rainforests, and the stunning capital city of Kuala Lumpur. 

The country also has a low cost of living, and most residents speak English as an unofficial second language, making it easy to navigate.

The country also has a program called Malaysia My Second Home, which allows retirees and non-Malaysians to live on a 10-year renewable visa and take advantage of tax breaks on their income.

Greece is a beautiful country filled with ancient history and breathtaking islands that you’ll easily be able to travel to from your home base in the country. You can get a five-year residency visa by investing in a property there.

The country also has a 7% flat tax on all foreign-sourced income, including pensions, retirement portfolios, real estate, and other investments. This could be a great way to save money on taxes if your income will be taxed at higher rates in the United States.

Mexico has a wonderful culture highlighted by its music and cuisine that will help you enjoy your retired years there. Its proximity to the U.S. is also a benefit for American retirees.

Mexico has a treaty with the U.S. that prohibits double taxation, so you can get credit on your U.S. taxes for taxes you pay in Mexico. The country also doesn’t tax Social Security income, which can benefit Americans who decide to move there and retire.

The Philippines is a beautiful country with plenty of lush landscapes and beaches to keep you occupied in your retirement years.

The country offers a Special Resident Retiree’s Visa, which allows retirees access to health care and property purchases. If you qualify for the visa, you can also get an income tax exemption for your pension and retirement investments.

Another Central American country that may be appealing to retirees is Belize. The country has plenty of beaches and sunshine for retirees to enjoy. It’s also one of the most popular scuba-diving sites in the world.

The country’s Qualified Retirement Program gives retirees tax breaks on income earned outside Belize. This includes retirement benefits like Social Security, a pension, or investments.

Check out Costa Rica in Central America as another option, with plenty of beaches, inland forests, and rivers to explore during your retirement. In fact, the country encourages ecotourists to explore all that Costa Rica has to offer.

Costa Rica doesn’t tax foreign income, so your retirement income plans may be safe from taxes if you live there.

New Zealand is a long flight from the United States, but it may be worth it if you want to retire to an English-speaking country with beautiful scenery. Its mix of cities and less populated areas means you can choose the lifestyle you want.

Taxation is based on your residency status in New Zealand. Residents transitioning to New Zealand get a 48-month tax break on income earned anywhere in the world. 

Also, you can't be double-taxed by both the U.S. and New Zealand, which might not be the case in other countries.

The island nation of Malta in the Mediterranean Sea could be a good option if you want to live in Europe. The country, like others in Europe, has a Golden Visa program. 

To qualify, you must invest a certain amount of money to get a Maltese passport and reside in the country.

Malta also has a Retirement Program for retirees who want to reside there. You may have to pay some taxes on your retirement income, but it could be less than how much you would pay to the U.S. government. 

Check the tax restrictions to see if a move to Malta would benefit you.

If you want a warm climate with activities, Ecuador may be another great country in Central America for you to retire. The country also accepts U.S. dollars as currency, so you can feel comfortable without worrying about an exchange rate.

Living in Ecuador will allow you to get tax exemptions on utilities and municipal taxes. You can also get discounts on other expenses, such as public and private transportation and international airfare,

Moving to a country with tax-friendly policies for expats may help you retire early. You could save a lot of money on taxes if you have a hefty 401(k) or IRA.

Living in Europe or Central America may provide a higher quality of life in retirement and stretch your retirement savings.