Ep 33: Guided By The Stars No More: A Roadmap To Retiring Abroad! (Part 1)
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There has been an uptick in the number of people looking to retire overseas. In Part 1 of this episode, we discuss the essential considerations for the decision.
We start by grouping those who want to move into the following groups
Those like us, who came to the US ages ago and are now retiring.
Those who have worked overseas and now want to return
Those who've only visited as tourists.
We explore the motivations behind such a decision, the importance of choosing the correct country, navigating visa and residency requirements, and the practical steps needed to prepare for the move.
Other topics that we cover here, amongst others, are:
Maintaining connections and communication while living abroad.
Safety and political stability are key factors in choosing a country.
Visa and residency requirements.
Visiting a country as a tourist for valuable insights before moving.
The cost of living to ensure affordability.
Maintaining a US address for various logistical reasons.
Healthcare access etc.
In part two of this episode, we'll address the financial and tax aspects of retiring overseas.
Episode Links & Resources
Are you Tax-compliant With Your Overseas Assets? - Free Guide - Scroll to the bottom of the page.
The speakers' views and opinions discussed in this episode should not be considered financial, tax, or legal advice. Consult your advisor for any legal, cross-border tax, and financial advice.
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Speaker 1 (00:06):
Welcome to the International Money Cafe Podcast, the show where we filter out the noise on cross-border taxes, finances, and life in the us. I'm your host, Jen Hams, certified financial planner, founder and owner of Elgon Financial Advisors.
Speaker 2 (00:21):
And I'm your host, man, Nadi, enrolled agent, owner and founder of Amman Tax and Business Services. Join us on this journey as we explore the unique challenges faced by inbound outbound families and businesses on taxes, compliance, and financial planning. Let's get to the show.
Retiring Overseas
Speaker 1 (00:43):
We are back with another episode of the International Money Cafe podcast. In today's episode, part one, we're going to talk about retiring overseas. Lately, we've had a lot of people reach out to us asking us what is it that they need to think about when they plan to retire overseas? And we always talk about what's your why do you want to do it? From what we are hearing, folks will talk about the cost of living is expensive here. We think it's going to be cheaper overseas, whatever the country is. The cost of health insurance here is really expensive. We want to be closer to family. We are adventurous. We want to travel, we want to see another part of the world. We're not sure about the political climate in the us so there's a whole lot of reason why people want to do this. When it gets really challenging, as you plan the move, knowing your why is going to be very, very key hands.
Why Do you Want to Retire Overseas?
Speaker 1 (01:44):
We need to start with why. Like Simon Sinex says, why are you doing this? To really get into the details of the discussion, the three groups of us tax residents retiring or looking to retire overseas, and based on the group that you fall into, your preparations may end up being a little different. So let's pivot this up into three major groups. The first group, which man and I are solidly in there, is folks that came to the US as adults. We've now grown old here, for lack of a better word. We have kids, we have families, we have our lives, we are now US citizens. We enjoy life in the us, but we are very in tune with what's happening home and there's this huge yearning to return back to our roots so we know exactly if we want to retire back home exactly what to expect.
Speaker 1 (02:47):
Obviously we know things have changed, but we have a pretty good idea of what to expect. We'll probably be very comfortable with the culture, be very comfortable with the language and all that goes along with it. And then you have the second group. This is a group that has lived overseas as experts. They may have worked at international companies or international schools, places like the World Bank. They've really had a chance to experience life in these other countries. It's also a little bit easier, but there are things they also need to take into consideration. And then we have the last group. These are people who've only traveled as tourists or they may not have traveled to any of these countries and now they really want to start exploring the idea of moving overseas. So the question is, what's the first thing you need to think about if you are thinking about or considering retiring overseas?
What to Consider When Considering Retiring Overseas
Speaker 2 (03:47):
Right? Right. Now that we've addressed the why, like Simon Simon says, now we get to the how, which is sort of the logistics around visa, residency, citizenship and all of that.
Choosing Where to Retire Overseas
But before we even get there, I think the first important thing to think about is choosing the country. And when you are thinking about which country you want to go and retire in, a couple of things that come to our mind and we were discussing this is first of course, is how safe is this place where you can go and live your life safely? How is the political climate? Is it stable or at least it seems stable for now? How friendly are the people in the country to expats and would you feel comfortable going and living there? And then of course the language. Do you know the language already? And if you don't, how willing are you to do the homework to learn the language?
Considering Language Barriers
Speaker 2 (04:57):
Of course, these days there are all sorts of apps. There's the dual lingo, the Rosetta Stone, so many of them you could pick up a language pretty easily. And then how comfortable would you be using maybe a different system? Maybe they use a different system like a metric system. How would you be comfortable using that? Because that could become a very important issue. And having thought of some of those basics. Then there are the big questions like the big one if it were me, would be how easy is it to get back and forth to the us? Say for example now, right Jane, you travel to Kenya often, and I go back to India. And for us traveling to Kenya or to India would definitely mean 24 hours of air travel. That's pretty long time to do a journey.
Considering Family
And then thinking about going back and forth, is family still going to be here in the us?
Speaker 2 (05:59):
Are those going to be your kids, your siblings? How easy would it be to maintain connections? In our situation, we have family all over, like for Jane for example, has cut siblings in many different countries and you should be able to maintain these connections with all of them.
Considering the Healthcare System
And of course, another really important thing to think about is the healthcare system in the other country, very fact that you are thinking of going somewhere to retire means that you will be growing older, hopefully not, but you might face medical issues for which you need a good robust healthcare system, which should be in place and you should be able to access it easily. And last but not the least, the cost of living.
Considering Cost of Living
How is the cost of living there? Would it be affordable? And how easy it is for you to afford the different daily things and the rent or all of that. So I think that those are really important things when you are thinking of choosing a country, right, Jane?
What Visa do you Need to Live in Your Chosen Country?
Speaker 1 (07:11):
Yeah. Yeah. And of course a lot of everything you've said so far, and as you point out, we ask clearly in that situation with family all over the place and the things we've done to maintain some of those connections. But again, it's something to your point you have to be prepared for. So you figured out or at least you've considered the country. The next question is going to be what sort of visa will allow you to go live in this country? So I like to think of this as the opposite of when we came to the us, we came on student visas and then they turn to work visas and finally they turn to green card and then citizenship. Now thinking about going to another country, it's more or less the same process. But of course what you need to do is pick the country, figure out exactly what kind of a visa can you get so you can figure out the requirements.
Speaker 1 (08:09):
So for example, if you want to get a long stay or a retirement visa to a country like let's say Brazil, they have something called the retirement visa. You need to show a certain amount of income. When I checked it last, they needed like a thousand US dollars of obviously passive income. You have other countries like Spain, which again, I think the retirement visa is called elective residence visa. Oh, by the way, every country calls this visa something different. New Zealand, which I always thought this would be a fantastic place to move to, will give you their version of the retirement visa. You need to be 66 years old, but you need to invest 750 K New Zealand dollars. So you need to look at every one of these countries, find out how old you need to be to qualify for that visa or Philippines. You can get it at 35, but most of the countries it's a retirement visa, 55 or 65, depending most of the visas will not allow you to work.
Requirements to Maintain a Visa
Speaker 1 (09:15):
And there are very specific requirements around being able once you get the visa to maintain it. So going back to your why, you need to figure out why are you willing to put up with what it would take to get that visa. Before this call, we were actually looking at this story on C Nnn where this couple planned to retire to Italy. They shipped everything and then they had to come back and apply for the retirement visa. But when they started the process, they realized there was something that wasn't going to allow them to qualify. And so what they ended up doing was picking another country. I don't know how many people are willing to do that. So please do your homework before is what we're talking about. And then of course there's a few other countries that might make it a little bit easier for you.
Speaker 1 (10:06):
I'm talking about citizenship based on your ancestry. So countries like let's say German, Canada, Ireland, Italy, Spain, Romania, India, they will allow you to apply for citizenship based on having had relatives and family that lived there. But again, you need to consider the requirements. You need to consider the restrictions of what that citizenship entails. And most of them start with the equivalent of our green card or a long-term residency card. So again, we were talking about this and we realized India for example, you can get your OCI card, but it does not allow you to vote. It does not allow you to buy agricultural land. So if your idea was to retire, integrate, vote, become a part of this life, you may have to consider either a different visa or a different country. And with that, we're going to take a quick break for an important message, but don't go away because when we come back we'll continue the discussion on things to consider about retiring abroad.
Speaker 2 (11:17):
Hey, dear I'm C listener. Let me tell you a little story. Coincidentally, when I started my practice, it was the same year in which FATCA was passed into law. FATCA stands for Foreign Account Tax Compliance Act. The government started to crack down on those who had financial assets overseas and were not compliant in disclosing these funds to the US government. The FinCEN Fbar filing requirement has been around since 1970, since the Bank Secrecy Act was passed. Well, even though it has been more than 10 years since these laws were passed, we still have many, many US taxpayers who may have the filing requirement but are completely unaware of it. I'm talking about that joint account with your dad with over 10 K back home. So this is in fact our most frequently asked question. We've put together a comprehensive free ebook which goes over the most important compliance requirements for overseas financial assets.
Speaker 2 (12:36):
And we want you IMC listener to have this ebook completely free. All you need to do is go to our website, www the im cafe.com, and scroll to the bottom of the homepage and enter your first name and email address and you will be able to download this handy ebook. Now, hurry, go get your free and fabulous download. Welcome back as we continue to talk about all of the logistics of what it takes to retire abroad. Where we left off, Jane was talking about getting a citizenship by ancestry. There's also a way of getting your citizenship by marriage. And many countries allow that. You have to find out the rules because obviously each one of them is different with the way how long you have to physically live in that country maybe, and what kind of connections you need. And like we were talking about, the visas, there might even be requirements for you to have a certain amount of investment in that country.
What to do Before Retiring in Another Country
Speaker 2 (13:49):
So a bit of homework to do now that we've talked about, okay, you've picked a country, you know where you are going and you've got your visa and that story of that couple in the CNN article, what are all the things that you need to do before you move? And while we were kind of planning for this episode, we realized that the first thing that you need to do before you move is actually to visit the country as a tourist.
Visit the Country
If you've never been, I think that that would be the most important thing if you were based on the group that you've never gone abroad or you don't have any connections right now, is visit the country as a tourist and maybe even stay there for a long-ish period of time and start making connections. We have noticed that there are a ton of expat groups.
Speaker 2 (14:47):
You have to find them. There are Americans in Germany, in Switzerland, depending on which country you select. And some of these groups are also online. I recently found out that my firm's name was being tossed around in a group for Germans who are US citizens based out there. So yeah, that goes to say that there are these groups maybe on Facebook, maybe online, and you should join them to get a feedback about what it means to be a retiree abroad versus be a tourist in that country. That's important.
Know Finances in that Country
And definitely we have to bring this up, know all your financial and tax nitty gritties of what it means to be in that country and being a part of this group might actually help you find those connections where you can find a tax professional or a financial professional who is familiar with both sides of the border and know about what it means to file your taxes and financial information and kind of get you settled. So that would be one of the things I think, right, Jane?
Speaker 1 (15:59):
Yeah, what I'm thinking is you talked about the finance and taxes, and I know we'll talk more about it and moving to this country and finding connections. So what that comes to mind is community, find your community, which could be online and cannot start hashing out some of these things. Now, we've talked about the logistics. We have visas. Hopefully you've picked out the country and you figured out what it would take. We are still in the us so what are now some of the practical things we want to start considering as we plan the move?
Consider your Belongings
Speaker 2 (16:39):
Yes, yes, yes. The first place where you would start is I think that you would have to think about what are you going to do with all of the most important things that you have at home. These could be your collectibles, maybe your things that are sentimentally important to you and a lot of your personal effects. What are you going to do with them? Maybe put them in storage. That would be one place to start. And as you're thinking about that, what are you going to do with your home if you are a homeowner, are you going to rent it while you are away? Are you going to sell it or are you going to leave it locked up? And of course, if you leave it locked up, then there are other things that you have to think about. Definitely maintaining the property and setting up maybe auto bill payments for this maintenance and other things or utilities, moving the grass, cleaning the snow if you are in a state up in northern part of USA like I am.
Consider Financial Accounts
Speaker 2 (17:44):
So that would definitely be something that you have to think about and not to forget. The most important things, of course, are your financial stuff. So the biggest one is your brokerage accounts. How are you going to access your brokerage accounts if you are abroad? Not all brokerage firms let you access your accounts from outside the country. A couple of ones that Jane and I know are interactive brokers and Schwab, they are the most friendly. There are others that might agree to do it, but you may have to have a lot of money with them. We are talking millions of dollars here.
Getting Money Back and Forth
And then the second thing that you have to think about when you are living abroad is how are you going to get your US dollars or your money back and forth from the us? The accounts that we see in common use are Ys, zoom, which is Zoom with an XOOM. And there are other apps like remit, et cetera. We are not endorsing any of these. These are what we've seen commonly in use. And definitely a big one is to get a credit card with no foreign fees. That's one that you should do a little bit of research and find out and make sure that you have at least one credit card, which has no foreign fees. And Jane, what are some of the other steps that you think are important?
Speaker 1 (19:18):
Ashley, there's one thing I just thought about that we should mention. As part of the money movement. We have all these apps that can use to transfer money. You could also potentially use a bank transfer from your US bank to your overseas bank. And we'll be talking about banking. I think I know more in the next section, but you do have to keep currency exchange in mind as you do this. So one of the good things with wise is you actually will know exactly how much you're going to get as you move the money, and it's almost instantaneously. So that's a good one.
Speaker 2 (19:58):
It's a good one for the exchange rate as well, right?
Maintaining a US Address
Speaker 1 (20:01):
Yes, that's a good one too. Yeah, that's a good point. The other thing you asked me I want to think about is maintaining a virtual US address. Now, if you're in the situation where you're going to sell everything, sell your homes, sell your car, sell everything, you really do need to still maintain a US address. And the whole idea of maintaining it being virtual is you can actually pay them to open some of your mail. This assumes there's nobody else that can do that for you. So that part is key. We also need to think about your state residency. And I keep thinking, Melissa and I talk a lot about, I think it's California and New York as being some of the highest tax skates because remember, as long you are a US tax resident, green card holder or US citizen, you'll always be a US tax resident.
Find Requirements for Being a State Resident
Speaker 1 (20:54):
So it doesn't matter where you were, you're still expected to file taxes and not only the federal taxes, but also the state taxes. So find out the requirements for becoming a state resident depending on the state that you are going to. So we see a lot of people moving to states where they don't have income tax. So places like, let's see, Florida, I think New Hampshire, Texas, but find out what they require. What does it take for you to be considered legally domiciled in that state? It could be you might have to register to vote, you need to show some connection, like maybe you're a member of the library or you need to show something like you have a driver's license from there. So please find out before you actually switch states. The other one we talk a lot about, and we're actually going to talk about our personal experiences here is phone lines.
Maintaining US Phone
Speaker 1 (21:48):
People say, oh, what do I do? Because I want to maintain my US phone. So in my situation, what I tend to do, I have an international unlocked phone. I use a company called One Plus. And the reason I use that particular phone, it's dual seam, and I don't mean the ece, I mean the physical seam. So I have my T-Mobile SI in there, I have my Kenyan seam in there. And what I do is as I travel back and forth, I'll put my phone on airplane mode. When I get to the next country, I get onto wifi and I'm able to use my phones that way. It makes life very, very easy. So I don't need to get a different phone. I'm still able to maintain the connection home. My family, like I said, they're pretty international and I know just about everybody ends up doing this.
Speaker 1 (22:42):
We also use Google Voice, which again, as long as you have wifi, you should be able to do it. And the one thing I do want to point out, this could be a cultural thing communicating with our families or anybody outside the us. We use WhatsApp. WhatsApp is really the app. I think that's used by just about everybody. You now have business accounts on WhatsApp. You have personal accounts on WhatsApp. As soon as we get out of the country, you put your phone on airplane mode, you buy what they call data. You understand what I'm saying? Depending on the country that you are in. And right away you've got wifi and you've got WhatsApp and you can communicate with anybody in any part of the world. Ashley Manasa, what do you do with your phones? That's a good one.
Speaker 2 (23:28):
Yeah. And while you were talking about the SIM card, I suddenly realized we were out of the country just recently with our family, and as soon as we got out of the airport, I saw all these stores there that were actually giving selling tourist sim cards. And I thought, oh, now that you're talking about it, I made that connection. That's how you could use that. What do we do for phones? Well, we have a plan with T-Mobile. It's kind of like a world plan where if you go to the other country and you turn off your airplane mode, the cellular connection connects with the local cellular connection because I guess T-Mobile has all of these connections with different providers in different countries. Let me say this though, that you don't get 5G everywhere and your data might be limited, but you can definitely use it for texting.
Speaker 2 (24:23):
And if you have an Apple phone, you could use it for I messaging, et cetera. But to your point, a WhatsApp calls and WhatsApp messages are usually your go-to because if you have to order Uber or you have to order some kind of local taxi service or something like that, and you don't want to give your number to everybody over there because like you said, culturally, people outside the US just use WhatsApp for everything. So you do use that quite a bit. So sometimes I just use my team mobile for using that data so I can make a WhatsApp call. So that's what happens.
Speaker 1 (25:04):
Yeah, and actually you do make a good point. All these cellular systems will work everywhere. The problem is if you don't have, for example, a plan, like an international plan, it tends to be very, very expensive for you to get on the local network. But we know all these local networks are there. And the other thing I do want to talk about is in one of our episodes, and we'll put a link in the show notes. We talked a lot about your identity and protecting that. And one of the things we said is make sure all your apps make sure all your systems are using two factor authentication. But what you find is most of them use your phone number. So that could be an issue if you are living overseas or your traveling and you need for your system to send you a code.
Speaker 1 (25:57):
So the other option you have is you will notice when they give you the option, there's also authenticate app. So there's a whole bunch of apps. So what we'll say is try and switch most of your two factor authentication to this apps because once you're in the other country, as long as you have wifi, as long as you have data, as long as you're on the network, you can still receive the message. It doesn't have to be on the phone, the cellular data, if that makes sense. And now that I've mentioned that before you leave, if you haven't done it yet, please listen to that episode. You need to freeze your credit report, you need to put a alert on your credit report. You need to make sure that nobody can use your data while you are gone. Anything else you want to add to this? Man?
Speaker 2 (26:50):
I was actually thinking that if you are planning to retire abroad, that means you're going to plan to live outside the country for a long time. Maybe you'll be just a good idea to, while you're doing your research about other things, is to also research your cellular plans and see which one would be a good affordable one and where maybe you can make us calls and receive us calls for these kind of emergencies, like when you're trying to connect to your financial institutions. So that would be definitely one thing. Of course, there's a whole bunch of other things that we have to think about when you plan to retire abroad. And we are talking taxes, we are talking financial accounts, we are talking estate planning and gift planning. But we are out of time for that today and we definitely already have it in the works.
Speaker 2 (27:43):
And we are working on part two of this episode. So do not miss that. We will come back to it. And retiring abroad is definitely a huge task. So Jane and I ask you to do your research and until then, as you are doing your research, happy traveling because I know you'll probably be going to all these different countries to see which one's a good fit for you if you haven't already. So with that, today we conclude this episode. Please go to our website, subscribe to be notified of all the episodes and something new that we are working on. And then of course, please go out and check out all our social media handles. We'd love to connect with you on Instagram or LinkedIn or Facebook or whatever's your jam. Until next time, bye. Hi,
Speaker 3 (28:35):
Thank you for listening to the International Money Cafe podcast. The content is for informational and educational purposes only and should not be used as a substitute for professional advice. Seek the advice of your qualified service provider with any questions you may have regarding your cross order finances and tax needs.