If the roughly 6.6 million Americans living abroad were collected into one state, it would have the 16th largest state population in the United States, according to the Association of Americans Resident Overseas. For many people, the idea of spending retirement on a beach in Mexico or buying a daily baguette in a French village is what makes all those retirement plan contributions worthwhile. If you're one of them, here's a sampling of some of the issues to research before packing your bags.

The cost of living

If you're hoping to stretch your retirement dollars in a lower-cost country, try to determine in advance whether your prospective new home is inexpensive partly because it lacks critical services you take for granted. Also, think carefully before making a permanent move. If you want to return to the United States later, you risk not being able to afford higher costs again. Also, if you're concerned about unfavorable exchange rates, check out countries with a currency pegged to the U.S. dollar.

If you plan to supplement your retirement income with some sort of work, consider not only prevailing wages and the job market, but whether there are restrictions on employment of foreigners. Dealing with a local bureaucracy to obtain a residence visa or work permit, or to start a small business, can be challenging. And if your work relies on online access, research the availability, type, and costs of a connection, including whether it involves expensive long-distance phone charges.

Tax issues

As a U.S. citizen, you'll have to file a tax return with the IRS, and you'll be subject to U.S. income taxes on your total global income. However, if you meet certain requirements, you may qualify to exclude up to $87,600 (in 2008) of any foreign earned income (check IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad for details).

You also may owe taxes to your new country. Some countries exempt income received from your home country, but do not exempt income earned locally. Your tax status abroad may be determined by your length of residence. It may be helpful to segregate money you made before leaving the United States from money you may earn in your new country, or that you earn in the United States after the move. Some countries tax various sources or types of income differently; keeping them separate may enable you to benefit from tax advantages on capital gains, dividends, or earned income.

Also, consider a country's total tax structure. Even in places that seem to have a tax advantage, taxes may simply be imposed differently. For example, a country with lower income taxes may also have a steep consumption tax.

Tax issues involved with living overseas can be complex; seek expert advice in advance of any move.

Health care

Medicare coverage does not extend overseas. If you're contemplating a semipermanent residency abroad, you'll need to research what health insurance options are available to you. Some countries restrict participation in their government-sponsored health insurance programs; others may require you to have private insurance in order to get a visa.

Even if you have private insurance, verify that you'll be covered abroad, and that hospitals and doctors in your chosen country will accept that insurance. Also, make sure that any preexisting conditions will be covered.

Housing

Moving to an area with an existing expat community could ease your transition; they're often a reliable source of important local information that isn't in any book. However, an influx of foreigners also may have driven up property prices beyond your expectations.

Attractive property values aren't always a plus, though. If you're contemplating buying a home, find out whether low prices are the result of an unstable economy, and whether there are restrictions on property purchases by foreigners. Renting for a while before buying gives you time to do valuable research.

Find out in advance whether getting a mortgage is an option. U.S. banks typically prefer to lend money for homes here, and there may be restrictions abroad that prevent you from obtaining a mortgage there. In addition, use a reputable local agent when contemplating a property purchase, and double-check to ensure that any prospective seller is actually authorized to sell to you.

These are only a few of the myriad issues you may face. The more you know, the better prepared you'll be for the inevitable surprises that come with a new and different life abroad.