Should you retire overseas

[Htown Harry]

Oh, the irony. Sojourning has gone traveling.

 

[steelyman]

Stuff like that says something about all involved.

 

[NYEXPAT]

I had never lived abroad and have been happily retired and living in Peru for over 10 years. I was having coffee this afternoon with several ER types who are planning to live here either most of the year or full time, One the Deputy Attorney General for a very large state and neither gentleman has lived overseas, but after travelling here dozens of times over many years, foresee no problems with the transition. In my limited experience it is single guys or divorcee's that easily make the transition, as well as some guy's that leave the spouse and kid's back home.

 

[DFA]

I had never lived abroad and have been happily retired and living in Peru for over 10 years. I was having coffee this afternoon with several ER types who are planning to live here either most of the year or full time, One the Deputy Attorney General for a very large state and neither gentleman has lived overseas, but after travelling here dozens of times over many years, foresee no problems with the transition. In my limited experience it is single guys or divorcee's that easily make the transition, as well as some guy's that leave the spouse and kid's back home.

NYEXPAT, whereabouts in Peru, I spent several weeks there in Lima and Pisco for work, when in Lima (late 80's) we were warned to not go outside a small area around our hotel because of political marches and protests. When in Pisco we were not allowed off the military base at all so we did not get to see much there either. I remember seeing a lot of trash along the main road into Lima and around the rivers or drainage ditches. I bet it has changes, but just wanted to know. We did a lot of flying around and got to see a lot from the air like the Nazca lines and drawings, some areas seem pretty desolate.

 

[Rob]

NY Expat, I admire you for calling Peru your home, and wish you the best. I'd like to attempt to do that simply because it would certainly be a challenge and an adventure. However, I'm unsure whether it would be best for me now.

I mentioned earlier on this thread that my whole working life was overseas (from 22 years old to 66 years old). I'm now a homeowner, which for me is a big thing, and I look at this as being an adventure, also. I live in Washington state, 25 minutes from Vancouver, and like to immerse myself in multi-cultural Vancouver. I return to a house on the water to look at White Rock, Canada from my back door in Washington state.

I believe, but not sure, that most of the respondents on this thread are younger than 68. I'd find it rough to take a chance making a permanent move now to a place like Peru and not be able to use Medicare, which is probably the main reason for returning to the States.

I think being in an area in the US that has an international flavor can give you the same feeling as being overseas. My life here is simple. I like that. I would certainly like to travel to Peru and spend a couple months there, but do you plan on being there in your 70's, or is this something more geared for ER types with the idea of eventually moving back to the States?


Rob

 

[DFA]

I was reading some posts on the Expat Exchange site on Ireland and ran across this story by MarianneB about being kicked out of Ireland after 8 months of trying to get permission to remain. Here is the link and her story is about half way done the thread.

Ireland Expat Forum ~ cost of living

It seems she did not meet the financial requirements, but could not get more information on what they were.

Also, what seems strange to me is the requirement for FBI background investigation.

 

[kramer]

I was reading some posts on the Expat Exchange site on Ireland and ran across this story by MarianneB about being kicked out of Ireland after 8 months of trying to get permission to remain. Here is the link and her story is about half way done the thread.

Ireland Expat Forum ~ cost of living

It seems she did not meet the financial requirements, but could not get more information on what they were.

Also, what seems strange to me is the requirement for FBI background investigation.

I think she is referring to an FBI criminal record clearance. Getting a criminal record clearance from your home country is pretty standard and required for most residency visas abroad, in my experience.

It is actually trivial and inexpensive to get one if you are in the US. I had to do this for my Philippines residency. I just went to a sheriff's department on my next trip to the USA and got fingerprinted using a standard form they use. Then I sent the fingerprints form into one of the many independent outfits the FBI certifies to perform these checks and had everything in one week. Yes, I was careful about the lettering and format I requested (the lady in that thread had a problem with this).

The harder part is getting it certified properly after you have your clearance. After receiving the document, I immediately sent it to the state department to get certified by them (there is a simple, standard procedure for this). Then I left the country as my vacation was over. I had my mom send the certified document to me in the Philippines. It was really the only difficult part of my residency requirements. They give you a year or more to complete this and you only have to do it once (e.g., you are given residency before providing the document but you sign something saying you will provide this document soon or they could revoke your residency).

I have to admit it is really nice being an actual resident as opposed to a tourist or being on a temporary visa (I lived that way for about 5 years in various countries). Now that I never have to visit the immigration office ever again, it would be hard to go back to the old way of getting an extension of stay every 2 months along with occasional border runs. And I get to use the diplomat passport line at the airport. And they don't even expect you to fill out the arrival form that all the other foreigners must fill in. I arrived back in the Philippines yesterday and spent approximately two minutes total in line and then getting processed at immigration.

 

[kramer]

Well, that was interesting! (Dusts self off). Thank you to the mods for taking charge of the situation.

Now back to regular business:

What do members think about the idea of relocating abroad in retirement if you have never lived abroad before?

I read about people who do this and wonder whether they have any idea what they are undertaking. Visas, permits, customs, language, alienation, unexpected glitches and missing home are just the beginning.

I moved countries several times as a young person in search of a career dream and have no regrets, but when I look back at all the challenges I faced (alone) I am not sure I could motivate myself to do it again at this point in my life.

I have been retired almost 8 years now. I moved abroad in early retirement and I would have to say that I was well clued in in many areas and clueless in many others. I went into it knowing that it might not be for me. And it took me time to get the experience to understand what i really wanted (and I mean several years). I still mentally wince at some of my past experiences. Now I consider myself a seasoned pro, but I think we all overestimate what we really know. But at least now I know what *I* want from a living abroad experience.

Most importantly, I planned my retirement so that if going abroad did not work out, I would be fine financially back in the USA or maintaining a USA home base with lots of travel. Since I ended up not needing or wanting a USA home base, my actual retirement budget has been under what I planned. But you have to have a backup plan for going abroad.

 

[LARS]

Again, interesting thread.

At the end of the day, this thread has re-enforced for me personally the approach of keep US as a base and then rent for 1 to 4 months at a time wherever the fancy takes us. The thought of transferring our "life" to another country full time seems to be, for us, a daunting task; and, moreover, I am far from convinced I want to be 85 and tottering around an adopted country.

Can't see my DW or I getting "old" anywhere but home (and for us that is the US).

 

[Meadbh]

I moved abroad in early retirement and I would have to say that I was well clued in in many areas and clueless in many others. I went into it knowing that it might not be for me. And it took me time to get the experience to understand what i really wanted (and I mean several years). I still mentally wince at some of my past experiences. Now I consider myself a seasoned pro, but I think we all overestimate what we really know. But at least now I know what *I* want from a living abroad experience.

But you have to have a backup plan for going abroad.

So very true. This applies even if you are returning to your country of birth. I know several Irish people who migrated to the U.S. or Canada for training, and after making a name for themselves in their fields eventually were able to find a position in Ireland. (They say that nobody in Ireland respects one's abilities ubless one has proven oneself somewhere else). Anyhow, for some of these expats, the return was a big disappointment. Some of them packed up their families and left to return whence they had come. They used to call it the $20,000 solution. These days it's probably the $50,000 solution. These would have been people in their working years, but they are unlikely to repeat the experiment in retirement.

 

[kramer]

I have not found the FATCA stuff to be a real issue for me living abroad. In the Philippines, thankfully, the banks are not rejecting USA customers. The FATCA forms themselves probably take me about 2 hours total per year to file (maybe twice that the very first time). Except for savings type accounts, all my investments are in the USA. And I am not taxed on foreign income by the Philippines government, even as a resident. So my US income tax filing is almost identical to what it would be if I lived in the USA. In fact, last year I filed my income taxes and my FATCA forms electronically from abroad without having received any snail mail from the USA, just looking at the online information at my banks and brokerages.

Although I receive a picture in email of each piece of snail mail that I receive at my mail forwarding service, and I can get any of it scanned, I have rarely needed the scanning service.

I get a lot of questions from other local expats on these financial issues. The big problems I find are just lack of knowledge of the requirements, lack of financial and technical sophistication to make their filings, and trying to hide money earned abroad from US taxation. I have been a big help on the first two to many

 

[MichaelB]

Most importantly, I planned my retirement so that if going abroad did not work out, I would be fine financially back in the USA or maintaining a USA home base with lots of travel. Since I ended up not needing or wanting a USA home base, my actual retirement budget has been under what I planned. But you have to have a backup plan for going abroad.

This is probably the single best piece of advice for anyone considering an expat retirement.

 

[kramer]

My almost 80 year old British neighbor is going senile. He is single and is watched out for by several of us neighbors. He is not a permanent resident, just extending a tourist visa. He will be able to legally stay about one more year. He cannot cross a border anymore and start the clock on another visa because any country (including the Philippines) might not let him in in his current state. And he cannot afford a permanent visa like I have. So he will be an illegal alien at some point, if he makes it that long.

He is actually doing OK and is probably happier here than he would be anywhere else, by far. And he has plenty of budget for living here although he must phone home each month to the UK as a "proof of life" to continue his pension -- some of these calls can be a bit comical.

He almost never leaves our street and gets regular care and he is safe. All his shopping and almost all meal preparation is done for him. We found his family on the internet and they had not chatted with him in years, were not even sure where exactly he was (they basically said that they knew old "Steve" had gone to the "Far East" a decade ago or so). It was only through them that we found out about how long he had been living here.

I took him to the British consulate to find out what his options were -- basically none and it didn't matter anyway because he doesn't want to ever leave. He is probably better off here than in some home back in the UK (his immediate family is spread out over three countries). But I certainly wouldn't want to trade places with him.

 

[Aus_E_Expat]

Kramer - the story about your British neighbour struck a chord with me.

I have seen it a few times with long term expats (rather than people who retire overseas after a career but I am sure the same is true).

After living 30 years or more in Asia, the cannot return to their home country as really they are so out of touch with the reality of the home country but they retain their home country citizenship and cannot settle long term in their retirement location.

I heard recently about a friend I knew well some time ago but have lost touch with in recent year. He has just turned 60, he has a British passport but grew up in Hong Kong and apart from time spent at university in the UK has spent his whole life in Asia. He has never married and has no children. He is about to finish up his current contract job, he does not have a lot of money and so his plan is to return to the UK to live where he will be eligible for free medical and pension. While the free medical and pension are important, I am sure he will go crazy very quickly and not be able to adjust.

It is sad and I think he would be better of staying where he is (or move to Thailand or Philippines) even if he dies before he is 70.

 

[Kabekew]

I was reading some posts on the Expat Exchange site on Ireland and ran across this story by MarianneB about being kicked out of Ireland after 8 months of trying to get permission to remain.

To me it looked like she was applying for residency. The permission to remain is just an extension of your initial 90 days. You said earlier you go to the police and they extend it for 12 months. I couldn't find that, in fact it seems you need to have a "stated purpose" and the duration of the extension is "for the duration of the stated purpose":

Irish Naturalisation and Immigration Service Permission to Remain for Non-E.E.A. Nationals

There's a reference for "up to 12 months" for those with work permits, but for a retiree planning to use that as a home base for travel, what would be your stated purpose? Tourism? How long would they grant in order to accomplish that, just whatever you ask for?

 

[DFA]

To me it looked like she was applying for residency. The permission to remain is just an extension of your initial 90 days. You said earlier you go to the police and they extend it for 12 months. I couldn't find that, in fact it seems you need to have a "stated purpose" and the duration of the extension is "for the duration of the stated purpose":

Irish Naturalisation and Immigration Service Permission to Remain for Non-E.E.A. Nationals

There's a reference for "up to 12 months" for those with work permits, but for a retiree planning to use that as a home base for travel, what would be your stated purpose? Tourism? How long would they grant in order to accomplish that, just whatever you ask for?

Kabekew-You may be right for the duration, I just remember reading that the Stamp 3 for retirees and others would need to be renewed every 12 months, I have been reading over this again and I can not find the 12 month requirement at this time. I will keep looking.

 

[superdave]

Great thread folks. Will be visiting the Philippines this year, with food for thought.

 

[AndyS]

We've done both and loved it.

In 2013 we went to England in April for a wedding in the NE, then set off on our own. Stayed in a farmhouse doing B&B in Northumberland just off the Roman wall for a few days then rented an apartment in Yorkshire for a week and climbed the 3 peaks. Then to Ireland for 2 rented houses, staying 2 weeks in Donegal, and 2 weeks in Connemara. Then to Cornwall to a rented apartment for 2 weeks, then France for 2 different weeks in rented houses, then back to England for a week in a rented cottage on a farm on top of the cliffs near Dover. We finished the vacation with a 2 week cruise out of Edinburgh to Iceland and Norway.

Among the things we did last year was a 2 week rental of an apartment near Melbourne, a week in a B&B near Sydney and a month long rental of a condo near to Hobart, Tasmania. (no car needed in any of those places because of great public transportation).

How did you find these short-term rentals?

 

[nun]

I heard recently about a friend I knew well some time ago but have lost touch with in recent year. He has just turned 60, he has a British passport but grew up in Hong Kong and apart from time spent at university in the UK has spent his whole life in Asia. He has never married and has no children. He is about to finish up his current contract job, he does not have a lot of money and so his plan is to return to the UK to live where he will be eligible for free medical and pension. While the free medical and pension are important, I am sure he will go crazy very quickly and not be able to adjust.

It is sad and I think he would be better of staying where he is (or move to Thailand or Philippines) even if he dies before he is 70.

He'll get the free healthcare by just moving to the UK, but to qualify for a UK state pension he needs to have paid National Insurance contributions. Unfortunately people don't plan ahead. I'm a single UK/US dual citizen, retired expat. I was born in the UK but I've spent the last 30 years in the US. I don't see much difference between living in the US or Europe, I could easily do either. I have long term care insurance in case I get senile, or I could move back to be with family. I visit the UK often and don't really understand why you have to lose contact with modern media and airplanes.

 

[Alan]

How did you find these short-term rentals?

My wife does all the hard work and research. I know that for the UK a good resource she uses is UK's number one property website for properties for sale and to rent

For Australia I think she just googled and searched in the cities we wanted to stay.

Australia Vacation Rentals, House Rentals | HomeAway

 

[explanade]

One thing is that some cities are cracking down on vacation rentals, especially targeting AirBnB.

Paris is said to be enforcing limited vacation rentals, only 4 months a year on your primary residence can be used for vacation rentals and secondary properties must be approved by the city.

 

[eta2020]

Quite frankly theOAP, the more I read about the paranoia of Americans here, with the IRS and worldwide income, the happier I am that I am not an American. I'm just about at the point that I would advise anyone who is and plans to retire overseas, that they do everything they can to get another passport and renounce US citizenship. It ain't good for much other than living in the USA. Given that someone has chosen to retire and live in another country and assuming they 'stick', I'd say after a few years, dump the US citizenship and move on with life. Move all money, all investments out of the US. Leave only a government pension for them to tax you on as a foreign national. Stand up and show them that US retirees are not all wimps who think the IRS is omnipotent and omniscient.

This is not a good option for people with high net worth (lot of folks here) because you will be slapped with giant "exit tax" and once non US Citizen living abroad your SS will will be taxed at flat 30%.

I have Dual EU and US citizenship so this option is available for me but it is not financially viable.

 

[Alan]

This is not a good option for people with high net worth (lot of folks here) because you will be slapped with giant "exit tax" and once non US Citizen living abroad your SS will will be taxed at flat 30%.

I have Dual EU and US citizenship so this option is available for me but it is not financially viable.

The default position on SS is 30% taxation to non-resident aliens, but if you are living in country with a tax treaty with the US then the SS will almost certainly be taxable only in your country of residence. Certainly the UK has a DTA with the USA and SS is taxed only in the UK.

FWIW, when we return to live in the UK we will not be renouncing our US citizenship, we will keep all our US investments in the US and will file taxes in both countries.


International Programs - Nonresident Alien Tax Withholding

If IRS considers you to be a foreign person for tax purposes (or nonresident alien), SSA is required to withhold a 30 percent flat income tax from 85 percent of your Social Security retirement, survivors, and disability benefits. This results in a withholding of 25.5 percent of your monthly benefit. You may be exempt from this tax (or subject to a lower rate) by treaty. To learn more about nonresident alien tax, you can review U.S. Tax Guide for Aliens (IRS Publication 519) or visit IRS�s website.

 

[Ed_The_Gypsy]

This is a long and very interesting thread, even with the fussing. That doesn't bother me. I hope the thread continues with updates. Here is my dos pesos:

Expatriation is now mostly an intellectual exercise for me as our situation has improved significantly after the last four years working overseas. Still, long term care is a serious threat as our means are limited. My tentative Plan B for that at the present time is Mexico because of cost, of course, and proximity to the US for family and Medicare reasons. Mexico is a BIG country with internal differences almost as great as ours. I have identified a few places where I think we could be safe and comfortable. More research on the ground is needed.

If we did wind up spending a lot of time elsewhere before then, we would keep some kind of residence in the US, where we are now. All the famous perpetual travelers keep a home base in the US, but they are all younger than we are so no guidance there. I really DO NOT like the idea of buying property anywhere outside the US, not even Canada.

I have some friends who are seriously considering leaving and renouncing their US citizenship. Apparently it is not very difficult for us little guys, but that is not for us.

As mentioned above, not all countries in the European continent are Schengen countries (although most have converted to a 3-month residence limit by now), so it is possible to spend as much time as desired outside the US (with compromises on weather, healthcare and availability of familiar things) as long as one moves every three months or less.

I do not see the need for owning an automobile anywhere we have visited and many other places, I am sure. Get over it and save yourself a lot of money and trouble.

To get money, I do not see the need for anything more than debit and credit cards (get ones with chips and PIN numbers if at all possible). Bank accounts and investments outside the US are a huge headache.

 

[Alan]

Thanks for the update Ed - great post.