Currency Risk

Overseas retirees might keep their savings in one currency, while their expenses are in another. That makes them vulnerable to the whim of currency markets. From 2000 to 2008, the U.S. dollar lost almost half its value against the euro. Movements can be sudden: In three months in early 2011, the dollar lost 11 percent against the euro.

Keep at least six months of living expenses in local currency, says Benningfield. Keeping some assets in your native country can also be smart if inflation is higher abroad, since even if currencies hold steady, inflation can radically reduce buying power. Weldon says food prices are up 40 percent in Buenos Aires over the past year.