Retiring Outside the U.S.? This Could Cost You Thousands

May 29, 2025

You’ve built a rock-solid retirement:

✅ TSP on track
✅ Pension locked in
✅ Social Security eligibility checked

Now the dream is shifting. Maybe it’s laid-back living in Portugal. Maybe it’s the affordability of Thailand or Costa Rica.

But here’s what many federal retirees miss:

Some of your benefits—especially FEHB, COLAs, and Social Security—don’t work the same outside the U.S.

And without planning ahead, you could lose thousands a year… quietly, and permanently.

🩺 FEHB: You Can Keep It—But With Limits

Yes, federal retirees can generally keep FEHB coverage abroad.

But there’s a catch most don’t learn until after they’ve moved:

  • No in-network providers

  • No direct billing

  • Limited international coverage

You’ll pay upfront and file for reimbursement—often at U.S. rates, even if you’re overseas.

And preventive care? Frequently uncovered.

Tip: Pair your FEHB with an international plan—or maintain U.S. access for major medical needs.

🧊 COLAs: Not All Retirees Get Increases Abroad

Think your Cost-of-Living Adjustment (COLA) keeps coming no matter where you live?

Not so fast.

  • FERS retirees already receive reduced COLAs.

  • CSRS retirees may lose them entirely in certain countries.

  • Some locations fall under U.S. Treasury restrictions—which means no COLA increases at all.

With inflation rising, a frozen COLA means a shrinking lifestyle.

🧾 TSP Distributions: Tax Trouble Across Borders

You can access your TSP from anywhere—but some overseas banks won’t accept U.S. government transfers, and certain countries don’t recognize TSP’s tax-deferred status.

The result?

You could face double taxation—paying U.S. income tax and foreign tax on the same distribution.

Work with a cross-border tax advisor before making any country your home base.

❌ Social Security Can Be Suspended (Or Taxed Twice)

Some countries restrict or delay Social Security payments, especially if no tax treaty exists.

  • In “blocked” countries, your payments may be suspended.

  • In others, you may be taxed again—unless a treaty provides relief.

  • And in many cases, you’ll be expected to file regular proof-of-life or even return to the U.S. periodically to maintain eligibility.

✅ Bottom Line: Don’t Let Your Benefits Stop at the Border

Retiring abroad can work. And many feds do it successfully.

But it’s not as simple as buying a one-way ticket.

These are U.S. federal benefits, built for a U.S.-based retirement system.

Before you leave the country, make sure your retirement income can come with you—fully, safely, and legally.

Best,
—Federal Wealth Retirement