Currency risk can be a legitimate concern for retirees moving overseas. The exchange rate between the U.S. dollar and the currency of your new home country could change dramatically over time. A monthly retirement income of $1,500 may afford you a rich and comfortable lifestyle on arrival, but in five years, you could pay 25% more to maintain the same standard of living.
You can mitigate currency risk by investing in a home in the country where you’d like to live. Housing is typically the biggest part of any retiree’s budget, and by buying your home rather than renting, you can eliminate fluctuations in monthly costs and your exchange rate exposure. However, not everyone can afford to buy a home overseas in retirement.
Some countries, including Mexico, Nicaragua and the Dominican Republic, have begun pricing real estate in U.S. dollars in regions particularly attractive to foreign buyers. Pricing houses and condos for sale in dollars simplifies sales transactions, and American buyers don’t have to think about exchange rates when buying property.
You could also convert U.S. dollars to the local currency in advance with the help of a foreign exchange service. Ideally, you could buy the foreign currency you need to pay your bills when the dollar is strong. However, this requires trying to time exchange rate fluctuations, which even professionals are not always able to do.
The other way to protect against exchange rate risk is to move to a country where no exchange of currencies is required. The list of places that accept the U.S. dollar isn’t long, but it includes some of the world’s best options for living, retiring and investing overseas.
Here’s a look at countries where retirees can easily use the U.S. dollar.
[READ: 10 Places to Retire Abroad on Social Security Alone]
Belize
Belize is a sun-drenched retirement haven where English is the official language. The country pegs its dollar to the U.S. dollar at a rate of 2-to-1. You can easily and freely spend U.S. dollars in Belize. They are accepted everywhere, alongside Belize dollars. If you give a shopkeeper $20, he’ll give you change for $40 in Belize currency.
However, when you take money out of a U.S. bank account from a Belizean ATM or wire funds to a bank account in Belize, the bank will exchange currencies at a less favorable rate of around $1.98- or $1.99-to-$1 and then keep the difference as the transaction fee.
[READ: The Best Places to Retire Overseas Where English Is Spoken]
Cayman Islands
In May 1503, Christopher Columbus’ ship was blown off course during a trip between Hispaniola and Panama, and he found himself on the islands he named Las Tortugas after the turtles he saw crawling the beaches. Sir Francis Drake later called them the Caymanas, the Carib name for crocodiles, and it stuck.
It wasn’t until the 1730s that the Cayman Islands — Grand Cayman, Cayman Brac, and Little Cayman — gained permanent inhabitants. Today, Grand Cayman, home to a population of 67,000, is where you’ll find most expats, although there are some on the smaller islands, too. Grand Cayman’s picture-perfect sandy beaches and warm waters welcome half a million tourists each year.
Grand Cayman is a thriving offshore financial center where multinational companies do not pay corporate, income, payroll or withholding taxes. Plus, Cayman residents are not subject to local income, capital gains, corporate, sales, death or annual property taxes, and there are no restrictions on foreign property ownership.
Since 1974, the Cayman Islands dollar has been pegged to the U.S. dollar at a fixed rate of 1-to-1.2. Most places take both Cayman dollars and U.S. dollars, although you’ll get change in Cayman dollars. Most ATMs in the Cayman Islands offer both currencies as well. The odd fixed rate means you will have to pay attention to the change you receive in Cayman dollars, worth more than U.S. dollars.
[Read: Where Retirees Can Buy a Home Overseas for Under $100K]
Panama
Panama is a popular overseas retirement spot. Its benefit-rich retiree pensionado residency program, accessibility to the U.S., year-round sunshine and developed infrastructure draw many retirees to the area. The highland town of Boquete is home to one of the biggest expat communities in the world.
Panama pegs its balboa to the U.S. dollar at a rate of 1-to-1, but the U.S. dollar is also accepted as legal tender. Balboas are only minted as coins, and there are no banknotes.
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Best Places to Retire Overseas That Use the U.S. Dollar originally appeared on usnews.com
Update 05/30/25: This story was published at an earlier date and has been updated with new information.
