When considering retiring abroad or investing in foreign properties, financial planning issues, including taxes, insurance, investment and real estate must be addressed before leaving the shores of America.
Here are some things to consider when looking to retire abroad and abroad:
EXPERT ADVICE: The first thing that is required is to seek experts who can help you with the questions you have as well as help you with the questions you need to ask. To protect yourself, your spouse and your most important years, talk to an expert who has experience in property and tax law for expatriates..
Taxes can be complicated, so it is wise to meet with a tax advisor who has experience with foreign tax matters. This is especially true if the person plans to work part-time and has a potential tax liability both in the United States. and their new country of residence. “
TAXES: Suppose you have not relinquished your U.S. citizenship, there will still be two certainties in your life death and taxes. No matter where you live, as long as you are a U.S. citizen, you still owe income tax on all income. The good news, however, is that there are certain tax treaties and foreign exclusions and deductions for income, but for most people it is difficult to decipher and use these deductions and properly without assistance.
U.S.A. provides a foreign tax credit for at least partially mitigating the double tax burden by paying taxes to a foreign government and U.S.A., but you are likely to still owe taxes in the United States. Even if you retire abroad, you can still owe state taxes. But if you have established a residence in a tax-free state before moving abroad, you can position yourself to save thousands. Also, check if interest paid on a foreign property is tax deductible in the United States.
HEALTH ORGANIZATION & INSURANCE: How you pay for health care is also a problem. Most employers provided retiree health plans do not have or have very limited overseas coverage, and Medicare does not provide coverage to the U.S. citizens living abroad.
It just means you have to self-insure, buy coverage in your new country or buy an international policy. The good news on this front: In many destinations, you can buy health insurance that is as good or better than your current provider and get it for a fraction of what you pay now.
For example, in many destinations, Americans have access to excellent healthcare provided by physicians trained in the United States or Europe. Your healthcare can cost you about half or less than what you pay today. In addition, because a visiting doctor’s visit says Panama or Ecuador will only cost you about $ 25-50, many will simply choose to pay out of pocket.
In less developed countries, it is clear that the quality of your health care needs to be considered. Although Expats are eligible for Social Security benefits that can be deposited directly into a U.S. bank account, retirees able to incur certain fees for transferring money to a foreign bank account and converting the U.S. dollars to local currency. There are some costs, but in most cases you can have your social security redirected abroad.
INVESTMENT: Because taxing investment in a foreign country can be complicated, and some countries directly prohibit the property of foreign nationals, retirees planning to invest in property or securities in a foreign country need to consider working with a reputable lawyer and others financial professionals.
Most countries do not have strong regulatory agencies, as we do here in the United States. Agencies such as the Financial Industry Regulatory Authority and the Securities & Exchange Commission … so be careful if you plan to invest in the country where you live:
PROPERTY: One issue that seems to catch many Americans who are off guard is the different property rules abroad. Many Americans falsely assume that the right to own property is the same elsewhere as here in the U.S.A. Not true. For example, in Central America, what people can think of as real estate might actually be shares in a company. In this case, no real estate is available, so if the company fails, the entire investment could be lost.
A good rule of thumb for those who want to retire abroad is to determine how easy it is for an American to sell a property abroad. Some governments are happy to have Americans invest, but they are not happy about allowing profits to be “exported”, so they impose restrictions on the transfer of cash and other assets from the country. Investing abroad can be an enjoyable experience. Basically, it comes down to knowing the rules, laws and regulations of the foreign country.
ESTATPLANLÆGNING: U.S. courts generally do not have jurisdiction over the transfer that goes to the next generation of a foreign asset owned by a U.S. citizen. Trusts prepared in the U.S. cannot normally contain foreign assets. Retirees need to consider working with a local real estate attorney for the proper transfer assets as well as estate planning. One must understand whether or not existing wills, durable power of attorney and advance directives on healthcare are recognized by the foreign government.
To provide for distribution of both U.S. property and your foreign property. Updating your wills is a good idea, especially if you own foreign property. You may even need a foreign will to handle your foreign assets, or just adjust your U.S. will, to arrange for the disposal of your foreign property. Get your “power of attorney” checked by a local attorney, especially since it will be the local hospital who will look at the medical power of attorney if you become incapacitated.
alternatives: For those who want to move to an exotic location but do not deal with tax issues or the potential real estate issues, you may want to consider Panama, Ecuador, Guam, Puerto Rico and the U.S. Virgin Islands. Things are less complicated for people planning to retire there, and a growing number of other countries are offering incentives to retirees age 65 and older, including Asia.
Panama offers discounts on doctors’ bills and has cheaper mortgage loans. Ecuador treats its retired community with a lot of respect and offers a refund of VAT, half-price for buses and airfare and front line privileges in places such as the bank, airport customs and others. Some governments like the Philippines have streamlined their visa process and introduced low monthly income requirements to make it easier to move to their country.
Panama offers a “friendly nations” visa that provides full residency to foreigners from other countries as well as many other financial incentives.
It’s a symbiotic relationship. Elderly people can stretch their nest eggs longer with lower living and health costs, and the developing country receives a financial boost from the pensioners.
The programs appear to work with 50,000 retired workers and their spouses who receive Social Security benefits in South and Central America as well as the Caribbean. Meanwhile, 100,000 retirees and their spouses received Social Security in Asian countries … an increase of more than 200% since 2003.