When considering retiring abroad or investing in foreign real estate, financial planning issues, including taxes, insurance, investments, and estate plans should be boarded before leaving the shores of America.
Here are some things to consider when looking to retire abroad and abroad:
EXPERT TIP: The first thing that is required is to look for experts who can help you with the doubts you have as well as help you with the questions you need to be asking with an expert who has experience in Real Estate and Tax Law for expatriates..
Taxes can be complicated, so it’s wise to meet with a tax advisor who has experience with foreign tax issues. This is especially true if the person plans to work part-time and has potential tax liability in both the US and their new country of residence.”
TAXES: Assuming you haven’t given up your US citizenship, there will still be two certainties in your life: death and taxes. Regardless of where you live, as long as you are a US citizen, you will still owe income taxes on all income earned. However, the good news is that certain tax treaties and foreign earned income exclusions and deductions are available, but for most it is difficult to figure out and use these deductions correctly without help.
The US provides a foreign tax credit to mitigate, at least partially, the double taxation burden of paying taxes to a foreign government and to the US, however, you will likely still owe US tax. retire abroad, you may still owe state taxes. But if you have established a residence in a tax-free state before moving abroad, you could position yourself to save thousands. Also check if interest paid on a foreign property is tax deductible in the US.
HEALTH INSURANCE: How you will pay for health care is also a concern. Most employer-provided retiree health plans have limited or no coverage abroad, and Medicare will not provide coverage for US citizens living abroad.
That just means you’ll need to self-insure, buy coverage in your new country, or buy an international policy. The also 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 will have access to excellent health care services, provided by physicians trained in the US or Europe. Your health care could cost about half, or less, of what you pay today. Also, because a visit to the doctor in, say, Panama or Ecuador will only cost you around $25 to $50, many will simply choose to pay out of pocket.
In less developed countries, the quality of your medical care will obviously have to be considered. Although expatriates are eligible for Social Security benefits that can be directly deposited into a US bank account, retirees May incur certain fees for transferring money to a foreign bank account and converting US dollars to the local currency. There are some costs, but in most cases, you can send your Social Security abroad.
INVESTMENTS: Because taxes on investments in a foreign country can be complicated and some countries outright prohibit ownership by foreign nationals, retirees planning to invest in property or securities in a foreign country should consider working with a licensed attorney and others. financial professionals.
Most countries don’t have strong regulatory agencies like we have here in the US Agencies like the ‘Financial Industry Regulatory Authority’ and the ‘Securities and Exchange Commission’… so you must have Be very careful if you plan to invest in the country in which you reside:
REAL ESTATE: One problem that seems to surprise many Americans is the different property rules in foreign countries. Many Americans falsely assume that the right to own property is the same elsewhere as it is here in the US It is not true. For example, in Central America, what people may think is real estate may actually be shares in a corporation. In that case, there is no real estate ownership, so if the corporation fails, the entire investment may be lost.
A good rule of thumb for those looking to retire abroad is to determine how easy it is for an American to sell property abroad. Some governments are happy for Americans to invest, but are not happy to allow the profits to be ‘exported’, so they impose restrictions on the transfer of cash and other assets out of the country. Investing abroad can be a pleasant experience. Basically, it is about knowing the rules, laws and regulations of the foreign country.
ESTATE PLANNING: US courts generally do not have jurisdiction over the transfer to the next generation of a foreign asset owned by a US citizen. Trusts drafted in the US generally cannot contain foreign assets. Retirees should consider working with a local estate attorney for the proper transfer of assets, as well as estate planning. One must understand whether or not existing wills, durable powers of attorney, and advance health care directives are recognized by the foreign government.
In order to provide for the distribution of both any US property and your foreign property. An update on your wills is a good idea, especially if you own foreign real estate. You may even need a foreign will to manage your foreign assets, or simply adjust your US will to arrange for the disposition of your foreign property. Have a local attorney check your ‘powers of attorney’, especially since it will be the local hospital that will be to see the medical power of attorney if you become incapacitated.
ALTERNATIVES: For those who want to move to an exotic location but not deal with tax issues or potential estate planning issues, they can consider Panama, Ecuador, Guam, Puerto Rico, and the US Virgin Islands. Things are less complicated for people planning to retire there and a growing number of other countries are offering incentives for retirees 65 and older, including Asia.
Panama offers discounts on doctor bills and has cheaper mortgages. Ecuador treats its retirement community with great respect by offering sales tax refunds, half-price bus and plane tickets, and front-of-the-line privileges at places like the bank, airport customs, and more. Some governments, such as the Philippines, have simplified 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 grants full residency to foreigners from other countries, as well as many other financial incentives.
It is a symbiotic relationship. Seniors can stretch their savings further with lower living and health care costs, and the developing country enjoys an economic boost from retirement spending.
The programs appear to be working with 50,000 retired workers and their spouses receiving Social Security benefits in South and Central America, as well as the Caribbean. Meanwhile, over 100,000 retirees and their spouses were receiving social security in Asian countries… an increase of more than 200% since 2003.