Living in UK&USA. What to do about pensions/savings?

[LeoSaves]

Hey everybody! I'm moving to NY on the 9th December and have something on my mind...

I am 25, I have zero savings, zero assets & zero pension. I would like to begin rectifying this ASAP. My partner is in exactly the same position.

I may marry my USC partner within the next couple of years and I'm not sure where I'll live the rest of my life but there's a distinct possibility of alternating between a few years in the US and a few years in the UK.

What options are available for myself and people in the same position?

I started reading a little about how there are a *lot* of factors involved and that due to tax brackets and also due to not making the mistake of keeping all eggs in one basket, it's good to spread the field a little.

I know next to nothing:
- what options are available
- what are best
- how much to put into each
- how to start each one
- what is a safe investment
- what is an investment that is likely to grow
- what the impact is of me becoming a USC at some point and possible paying double tax?

I am totally and completely lost... and I'm sure I'm not the only one!

 

[aida2003]

Well, I think you first need to have income before you concern yourself with such questions, IMO.

 

[toofrugalformycat]

It's great you're thinking about such things at your age. I think that most people would agree that you should have six months living expenses set aside in a risk-free account (such as a savings account at a credit union or bank) and only after that, start investing in other things.
When you get a job, adjust your lifestyle so that you spend less than you make. The abbreviation for that is LBYM, live below your means. People will probably think you're weird (especially here in the U.S.) so you have to not be afraid to be different.
Although I early retired, I must admit that at your age I engaged in a few adventures that were not lucrative but greatly enriched my life, and I've never regretted it, in part because my body just couldn't do those things now. I didn't start saving for an early retirement until I was 28.

 

[nun]

Hi Leo, It's a small world.

I was in a similar situation as you 25 years ago.

First what will your status be in the US, ie what visa?

Will you be leaving any money, savings or investments in the UK.If the answer is no your life will be much simpler as far as US tax goes.

I agree with LBYM!!!!!! It's the most important thing to do as you can't sensibly save or invest without it.

Read the wiki over at bogleheads.org about investing and start saving money in the US as soon as you can. Depending on your exact tax residency your US income and investment gains will probably not be liable to any UK tax. Here is a list of things to do. As you can do each one move to the next.

1) Save 6 months funds in a bank savings account.
2) contribute to any retirement accounts your employer provides, try to put in enough to get the maximum match from your employer after that try to max out your contributions
3) open an account with a mutual fund company like Vanguard or Fidelity or a discount broker like Charles Schwab and start investing money in equities and bonds etc....I'd start with index funds (they are the same as UK tracker funds)
4)With your mutual fund company open a ROTH account and put in as much as you can. This is a bit like an ISA, but it's meant for retirement.

Also remember to contact HMRC in the UK to see if you can make voluntary Class 2 NI payments as they are really inexpensive, about 2.50 pounds a week, and they go towards your qualification for UK basic state pension. If you are working in the US for a US employer you'll probably qualify.

Finally what are you doing for healthcare? If you settle in the US and are not ordinarily resident in the UK you won't be eligible for the NHS. Do you have US health insurance arranged?