#Americans #retire #planning #offshore #overseas,
There is a lot of Americans are choosing to experience different cultures and lifestyles by moving abroad in semi and retirement.
In Y 2019, a total of 431,883 retired beneficiaries received their Social Security checks from abroad. That’s up almost 40% in the last 10 yrs.
Making such a move to live overseas will be an exciting new life chapter, planning ahead to manage finances is Key. Adding a new complexity into the planning process requires research, guidance plus a savvy financial plan.
Should you be thinking of making the leap to live offshore here is what to consider 1st, as follows:
1. Will you be semi-retired or fully retired?
Many people choose to continue to work past the traditional retirement age, whether for financial or personal purposes. If you plan to work part of the time in retirement, keep in mind this might not be an option overseas if you need to obtain a work visa.
That means you will likely have to prepare to be fully retired and without work after you move abroad. If you move to a country with a lower cost of living, you can reduce your living expenses and make your savings stretch further each month.
But you should put yourself in the best position possible to do this, which includes maxing out your 401(k) to save enough money for a retirement where you do not need to work.
2. Prepare for taxes
All American citizens need to file US taxes whether they reside in the US or not. While your retirement income and Social Security are exempt from state tax if you move overseas, you must still pay federal taxes on your total income.
Keep in mind, if you’re renting out a property or still earn funds from a business in the United States, then you would likely be taxed on the state level for this income as well, unless you live in a state that doesn’t have a filing requirement.
If you move to a country that does not have a tax treaty with the United States, there is a chance you could be taxed in both countries, so be sure to talk to a tax professional in advance of your move.
If you do earn income in a foreign country, you could qualify for a foreign earned income exclusion, which would exclude this amount from your United States taxes. In Y 2021, the limit for a foreign income exclusion is $108,700.
3. Budget for health expenses
While statistics show that consumers under 65 anni spend about 20% less annually than their younger counterparts, they spend 32% more annually on healthcare than other Americans.
While healthcare in the country you are moving to might be socialized for citizens or permanent residents of that country, the quality of healthcare can vary by region. Not just that, but private healthcare costs could turn out to be more expensive than you expect, and coverage might be more limited than what is available through Medicare.
Many expatriate pay for Medicare Part B and private health insurance, often adding an option to be airlifted to the United States in case of an emergency. But, private insurance policies often have an age limit. A popular policy by GeoBlue only offers insurance to those 74 anni and younger. You can also consider a group plan through the Association of Americans Resident Overseas.
While you might feel comfortable covering small costs out of pocket, it is the large expenses to be wary of, and these expenses tend to increase as you age if you want to live overseas permanently.
4. Don’t rely on your credit score in a foreign country
When you move abroad, you won’t have any credit history built up in your new country. While some countries could take into consideration your American history, most of the time this will not be the case. This could make it challenging to obtain credit if you need it.
Many people dream of moving abroad for retirement, and if that is your goal, it is possible to obtain. It requires advanced planning and more research than a traditional retirement in the United States.
Consider that while you might save money in some areas, such as living expenses, you could end up paying more in other areas, such as for healthcare or taxes in a country that does not have a tax treaty with the United States.
Have a prosperous day, Keep the Faith!
