Adventures Abroad


Adventures Abroad

What it takes to live overseas as an American citizen.

November 18, 2014

As more and more baby boomers come of retirement age, interest in living abroad seems to be gaining ground. For starters, some may feel they haven’t saved enough for retirement and may be looking for a way to stretch their dollars overseas. Still others may just want an adventure and a whole new lifestyle. Regardless of whether you’re retiring or working, there’s a lot to consider before moving across the world.

Family first
First, is your family on board? Living abroad means your entire lifestyle will change, from where you live, work and go to school to what you eat and what you do for recreation. It’s essential to take everyone’s feelings into account and address any issues before uprooting. Once everyone agrees, thoroughly research places that fit the way you want to live.

Find out as much as you can about climate, transportation, healthcare, amenities, recreation and reliability of utilities. Online research is your best bet here. Plenty of information can be found about an area’s history, culture, crime, cost of living, politics, economy and quality of life. Plus, there are numerous expatriate forums to help you better understand what your new life could be like. Once you’ve narrowed down your ideal location, get on a plane and spend as much time as you can living la vida local before making a permanent move. A trial run should mimic your everyday lifestyle, not a vacation.

Money matters
Finances can and should be a large part of your decision-making process. You’ll need to figure out how far your dollar will go, and like all financial planning, you’ll need to consider everything from your desired lifestyle to your income and expenses before creating a budget. International living experts estimate that Americans will need at least $700 to $2,000 a month (depending on what country they choose) to retire abroad. The upper end of the range allows you to live just about anywhere and gain access to many upscale amenities (daily housekeeping, anyone?).

Online banking and brokerage accounts can help you manage most money matters from afar (over a secure Internet connection, of course). And recurring payments, like Social Security, can be electronically deposited in many banks around the world. If you’d prefer, establish a local cash account to help avoid currency exchange fees and ATM withdrawal charges. Keep in mind, though, that local banks could have residency requirements, and you may have to cut through some red tape.

Tip: Be wary of offers to help transfer money. Foreigners are often targets for financial scammers. Only do business with reputable agencies and institutions.

Last, but certainly not least, discuss estate matters with a qualified attorney. You want to ensure that legal documents – such as powers of attorney, living wills, medical directives, trusts and wills – will be honored in your new home. And if you plan to invest abroad or move assets, find out if you’ll be subject to local tax rules. The U.S. embassy or consulate – along with your professional network – can point you in the right direction.

Talk about taxes
Before you make the move, consider your potential tax liability as well. The U.S. government taxes based on citizenship, not residence. You’ll be required to file a U.S. income tax return regardless of where you earn your money, and you may have to file one in your new country. But you may not owe taxes to both; a lot depends on where you derive your income and from what sources. Many countries have tax treaties with the United States to prevent double taxation. Consult an international tax professional to help you determine your total tax liability.

An ounce of prevention
Start thinking about how you’ll deal with health issues, too. Domestic insurances, including Medicare, generally won’t cover healthcare costs out of the country. And very few employers extend coverage to expat retirees. As a result, you may have to pay out of pocket or return to the States for certain types of care. There’s also the option of private local or international insurance. One caveat: These plans may not be available to all age groups, particularly those in their 60s.

About 350,000 Americans receive Social Security benefits outside the United States

Source: Social Security Administration

Some countries allow foreign residents to eventually tap into the national healthcare system or buy into it. Just be sure to get a feel for the availability, accessibility, quality and eligibility beforehand. Quality can vary from region to region, but many countries boast modern facilities staffed by well-trained medical professionals. You’re likely to find several local doctors who speak English, some of whom may have trained at renowned universities.

Feeling at home
Here’s where living overseas gets even more exciting. Depending on your family’s wishes (and the property rules in your chosen country), you could buy or rent a sprawling beachfront home, a spacious apartment with doorman or a quaint bungalow close to restaurants and a thriving nightlife. The key is to know the lay of the land so you can find a home in a safe neighborhood, close to the features you like.

Before the housewarming party, you’ll also want to assess the availability of certain conveniences. Not every place has ubiquitous Wi-Fi or even Internet service. You may not be able to watch your favorite American shows. Seriously think about what tradeoffs you’re willing to make, and objectively analyze things like the reliability of transportation/condition of roads, infrastructure, services and the availability of certain creature comforts.

A new life awaits
While living abroad seems appealing in many ways, remember a move like this is a big step and requires careful consideration and planning. If you’re not quite ready, consider a short-term assignment in a foreign country or establishing dual residences. Going on regular adventures can be the ideal way to enjoy the benefits of living overseas, while still being able to return home anytime you want.

On the other hand, you may be more than ready to get started after you’ve done your research and consulted with your professional network on all the logistics. Now may be the time to pack up and take the leap. Soon you’ll be enjoying the lifestyle you’ve imagined for yourself and your family.

Tip: If you plan to retire abroad then move back to the U.S., keep in mind that your Medicare premiums will be 10% higher for every 12-month period you could have enrolled but didn’t.

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