6 Tips for Handling Your Finances When Retiring Abroad
After working for decades building wealth for yourself and your business community, you retirement years afford you an opportunity to finally enjoy the fruits of your labor. You get to own your time and spend it however you like. If you’ve been productive all your life, you’ll definitely get to do this guilt-free and with a lot of satisfaction.
An increasing number of retirees are choosing to move overseas. Retiring by the beach or in a “green” environment, where you get 12 months of sunlight, is a dream shared by many people. If you are one of these people, you should take the time to organize your finances to suit your situation so you get to have a financially secure retirement.
The following are some of the actions you should take:
Finding the Right Bank
It is absolutely necessary that you have reliable banking services both at home and in your host country. Since you’ll be outside the country, the bank you choose should have comprehensive and easy-to-use online banking services. This is one of those times that you should pay attention to a bank’s reputation, as far as customer care is concerned.
It is wise to start building a relationship with the bank way before you move out of the country. This way you get to have a good financial history with the institution before you split your money between two or more banks, thereby reducing your leverage. Such history, besides your credit rating, can help you a great deal when looking for a personal loan.
While it is expected that your bank will charge higher fees for foreign ATM transactions, the rates should be reasonable. You are in retirement after all, so you should aim to reduce as many non-essential expenses as possible.
That said, it is prudent and necessary that you open a bank account in your host country. Such an account can help you better deal with foreign currency fluctuations. By transferring money to the account when the rates favor you, you get to reduce the risk of incurring losses due to unfavorable foreign exchange rates.
Weighing Your Health Insurance Options
Your health should always be a priority. At no time during retirement should you be without reliable insurance services.
Medicare does not pay for health costs incurred outside of the United States. You should therefore weigh your options to see if it makes sense to take up another policy in your host country, especially if you need continuous ongoing care and prescription medication.
Managing Travel Expenses
Travel doesn’t have to be expensive. Some of the most rewarding travel experiences you’ll have during your retirement years will be very affordable. It’s all about the experience and not the cost.
Keeping your travel expenses under control will ensure that your retirement savings last longer. You might want to start actively budgeting for every trip you go on. If you travel a lot and have an excellent travel credit card, you can get great travel deals.
Managing Your Investments
Through the power of the internet, you can now manage your U.S. investments from practically anywhere in the world with an internet connection. There are several platforms such as Motif Investing and online brokerages that give you easier access to your accounts and control over your investments.
With such level of control comes greater responsibility. You don’t have a lot of time to recover from a bad move, so it is wise to stay away from risky investments. It probably took you years to build your principal. You don’t want to lose a significant portion of it because of greed.
Talk to an Accountant About Your Tax Obligations
Do you know what your tax obligations will be when you start living in a foreign country as a U.S. citizen?
With proper tax planning, you can tremendously reduce your tax bill. If you are not careful, you might end up paying a lot of taxes to two governments, with the cumulative tax being way more than the already high taxes you would have paid if you were living in the United States.
Talk to your accountant before you make the move so you can optimize your tax situation.
Test the Real Estate Market Before You Commit
It is not a good idea to buy property right away when you move abroad. There are several things that might go wrong, including you finding out that you don’t like that part of town all together. The first place you stay in should ideally be a rental. With time, you’ll gain a better feel for what good prices are in different areas of the city.
Your financial goal as a retiree is to minimize losses and unnecessary expenses as much as possible, while still living a phenomenally comfortable life. You don’t want your retirement years to be ruined by financial worries. That said, you shouldn’t be a miser. You are free to enjoy your life as you wish, and if you believe something makes you happy, feel free to pay full price for the best quality.
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