Going Back to India to Retire: A How-to Guide

If you have ever held an Indian passport, are married for at least two years to an Indian citizen or at least one of your parents, grandparents or great grandparents is or has been an Indian citizen, you may qualify as a Non-Resident Indian (NRI) or Overseas Citizen of India (OCI). Having NRI or ORI status can impact Social Security benefits, owning property, dual citizenship and taxes. (Note that citizens of Pakistan or Bangladesh – or anyone whose parent[s] or grandparent[s] are [or were] citizens of Afghanistan, Pakistan, China or Sri Lanka – may not have OCI status.)

As a U.S. citizen you can continue receiving your Social Security benefits in India for as long as you are eligible for them. If you are eligible for Social Security benefits and are an Indian citizen but not a U.S. citizen, your payments will continue while you are out of the U.S. for six consecutive calendar months or more (depending on your situation) since, according to the Social Security Administration, “you have met an exception to the alien nonpayment provisions of the Social Security law.” Use the Social Security Administration’s Payments Abroad Screening Tool for details pertaining to your specific situation.

You can have your benefits deposited directly into a bank account or other financial institution in the U.S. or India (or in any country that participates in the Social Security Administration’s International Direct Deposit program). There are several advantages to using direct deposit: You’ll have access to your money faster than if you wait for checks to arrive, plus you eliminate the risk of a delayed, lost or stolen check. If your benefits are deposited in a U.S. bank, you can use your ATM card to access funds while abroad. Note that non-residents in India can open rupee accounts only for the duration of their visa (about six months for a tourist visa). The account will be automatically closed unless the visa is extended. 

Instead of using direct deposit, you can opt to have your benefit checks mailed to you or you can pick them up in person: The U.S. Embassy’s American Citizen Services Unit in New Delhi receives Social Security and other federal benefit checks from the U.S. Department of Treasury between the tenth and fifteenth of each month. Checks are then mailed out; however, if you prefer, you can pick up your check at the U.S. Embassy if you live in the New Delhi Consular District, or at one of the U.S. Consulate offices in Mumbai, Kolkata, Hyderabad or Chennai, depending on where you reside. The embassy does not process claims for Social Security; the closest Social Security Administration office is located in the U.S. Embassy in Manila, Philippines. 

Note that Medicare doesn’t cover health services you receive outside the U.S. If you return to the U.S., Medicare benefits will be available to you, but you will pay a 10% higher premium for every 12-month period you could have been enrolled but were not.

NRIs  and OCIs can legally own non-farm property and exercise property ownership rights. If you are a foreign national, you can legally buy property in India if you are a resident of the country. To qualify as an Indian resident, you must have lived in India for more than 182 days during the previous financial year (note that the tourist visa is valid for only 180 days), and your continued presence in India must be for the “purpose of taking up employment, carrying on business or vocation in India or for any other purpose that would indicate your intention to stay in India for an uncertain period.”

Real estate transactions in India are complicated whether you are an NRI, OCI or foreign national resident. To protect your interests and help ensure a smooth process, work with a qualified real estate attorney.

The U.S. Embassy in New Delhi notes that, “India does not allow dual nationality. By asserting your U.S. citizenship, India expects you to renounce your Indian citizenship.” OCI is the closest thing to dual citizenship that the government offers. You can eventually become an Indian citizen if you are an OCI for five years and live in India for at least one year. 

Indian residents are taxed on worldwide income. If you are a “Resident But Not Ordinarily Resident” (RNOR) or a non-resident, you are taxed only on Indian-sourced income. Although you must file your taxes in both countries, the U.S. and India have a tax treaty in place, which means you can avoid double taxation by taking advantage of certain exclusions and tax credits. Indian tax laws are complicated and are liable to change frequently, so it is strongly recommended that you hire an experienced tax accountant to receive the most favorable tax treatment possible. 

Figuring out details like Social Security benefits and land ownership are important parts of planning a retirement abroad. In addition to the logistics, it’s important to think about the impact that living in a foreign country will have on you. Anyone who has ever lived overseas knows that visiting a foreign country is one thing – settling there is a totally different experience. Even if you have family in India and no language barrier, your comfort zone may be challenged each day as you adapt to the new surroundings, customs and way of life.

While some adventurous retirees enjoy such changes, others may find them overwhelming. In these cases, it might be better to live overseas on a part-time basis only – perhaps six months at home and the rest of the year abroad. If your situation permits, it’s important to consider your comfort level, friends, family and healthcare needs before making any decisions to retire abroad fulltime. For additional insights, read Retirement: U.S. vs. Abroad, Bargain Cities to Retire to in India and Can You Retire in India With $200,000 in Savings?

Note: If you are a U.S. citizen traveling or living abroad, consider enrolling in the Department of State’s Smart Traveler Enrollment Program (STEP), which provides security updates and makes it easier for the nearest U.S. embassy or consulate to contact you and/or your family in case of an emergency.