Retiring to the US from the UK ...?

[Adventurer]

Hello all,

I figure this is the perfect place to ask this, as most contributors are from the US!

I fairly recently joined this board, and have decided to retire fully later this year. I’m late 40s, married, two late-teen children soon to go off to university in the UK (or perhaps US for one of them).

My question is please: how realistic would it be for someone to retire to the US with no US tax-efficient savings and no health plan?

Our situation, roughly $5.8m net assets. We’ll spend $80-$100k pa without the kids (education fund deducted from net assets already). The cost of housing would be much less than the UK. We’d consider either California or Colorado to live. The big unknown, and terrifying to a European, is how to navigate healthcare in the US.

Any thoughts or pointers on how to investigate healthcare for someone not familiar with the American system would be much appreciated!

Thank you!!

 

[Peter]

Have you thought about visas? This link describes the various ways you can obtain US residency:

https://britishexpats.com/wiki/Pulaski's_Ways:_How_to_Live_and_Work_in_the_USA_

 

[Adventurer]

The visa side of it is already ok, thanks. My wife was born in the US but left as a child. It’s just healthcare which would be problematic!

 

[ShokWaveRider]

The visa side of it is already ok, thanks. My wife was born in the US but left as a child. It’s just healthcare which would be problematic!

Healthcare is problematic, we were considering going back to the UK (or Canada) for just that reason.

 

[jim584672]

healthcare.gov

 

[samclem]

Medicare would be an option for you, once you hit 65. You'd need 10 years of earnings in the US (so you could pay taxes into Medicare, and also into SS), but the earnings are largely immaterial (i.e. you could get a side job at very low wages, or start a small sideline business and pay self-employment taxes for 10 years).


Here's a link to the Social Security pamphlet on earning credits. If you earn more than about $5400 per year and pay SS and Medicare tax on that, you'll get the (maximum allowed) 4 credits per year. After you have 40 credits and are age 65, you'll be eligible for Medicare. You'll also get a Social Security check as early as age 63, but it will be very meager if you have a 10 year earnings history and small contributions during that time (but, as a "return" on what you contributed, it would actually be very good).

 

[kite_rider]

It's perfectly understandable that an intelligent person would worry about healthcare over here, but with your assets you should be able to afford health insurance.

Once you get over the sticker shock on the price of insurance you will probably find life isn't so bad. In fact, if you are able to structure your investments in such a way that your income is not too high; you may even qualify for a subsidy for the health insurance premium and then it might even feel like a relative bargain.

Many people on this forum have engineered their income in such a way that they get very good health insurance at a very reasonable subsidized price.

I don't know what your motivation or interests are. But why not consider retirement somewhere like the Italian or French Alps? I ask because I have a similar financial / family situation as you and I've played with the idea of living in the Alps even though I know little about it..

 

[MichaelB]

Hello all,

I figure this is the perfect place to ask this, as most contributors are from the US!

I fairly recently joined this board, and have decided to retire fully later this year. I’m late 40s, married, two late-teen children soon to go off to university in the UK (or perhaps US for one of them).

My question is please: how realistic would it be for someone to retire to the US with no US tax-efficient savings and no health plan?

Our situation, roughly $5.8m net assets. We’ll spend $80-$100k pa without the kids (education fund deducted from net assets already). The cost of housing would be much less than the UK. We’d consider either California or Colorado to live. The big unknown, and terrifying to a European, is how to navigate healthcare in the US.

Any thoughts or pointers on how to investigate healthcare for someone not familiar with the American system would be much appreciated!

Thank you!!

The way to navigate healthcare in the US is ... carefully.

Actually, you will find that, under current legislation, you can get reasonable access to comprehensive health insurance, but it will be expensive. You can get an idea of policy options for specific zip codes here https://www.healthcare.gov/

A samclem mentioned, once you reach age 65 you will need to use Medicare, the insurance program for us oldsters. Most people qualify through work. That is not your case, you can still participate, but you need to pay. You can get some detail on that here https://www.hhs.gov/answers/medicare-and-medicaid/who-is-elibible-for-medicare/index.html

 

[jim584672]

The amount saved by not paying higher UK taxes would pay for the health coverage. Also the US has no inheritance tax for most people, in the UK it can be substantial.

 

[Alan]

The visa side of it is already ok, thanks. My wife was born in the US but left as a child. It’s just healthcare which would be problematic!

One other thought.

Has your wife been declaring her income and assets to the IRS? As a USC she has been liable for US taxes and Foreign Bank Account Reporting her whole life.

 

[Adventurer]

Thank you all for your answers. There’s quite a bit for me to read and research already here, so much appreciated! I’ve heard horror stories of people’s insurance premiums shooting up from one year to the next for no obvious reason, so I’m somewhat wary ...

Kite rider, yes, we have considered the Alps, also the French Pyrenees. We love hiking, the snow in the winter, the long days in the summer. I guess that’s why California and Colorado appeal also.

Unfortunately, Brexit may make it more difficult for Brits to effortlessly retire elsewhere in Europe, but having said that, we really don’t know where that’s all going to land ...

 

[Adventurer]

One other thought.

Has your wife been declaring her income and assets to the IRS? As a USC she has been liable for US taxes and Foreign Bank Account Reporting her whole life.

Yes, she has! It’s made our family tax planning a lot more complicated, unfortunately! One reason why it might be nice to live in the US is to get some value from all that very costly tax filing ..!

 

[6miths]

Also possibly consider Vancouver/Victoria in BC or southern Ontario (Toronto or Niagara). Healthcare much less of an issue, tax implications likely simpler and easy travel both to US and back to UK.

 

[Alan]

Yes, she has! It’s made our family tax planning a lot more complicated, unfortunately! One reason why it might be nice to live in the US is to get some value from all that very costly tax filing ..!

Excellent, because I think she would need to be up to date with her taxes to be able to sponsor you.

Good luck on your journey, wherever that takes you.

 

[rodi]

I find it interesting that you state that California will be cheaper than the UK. That's true if you are moving from London to the Mojave desert.... Perhaps not so much if you are moving to to the coast of California.

Does your spending per annum include taxes. California has higher taxes than many other states.

That said, I love living in California. For me, it's worth the expenses.

 

[Alan]

I find it interesting that you state that California will be cheaper than the UK. That's true if you are moving from London to the Mojave desert.... Perhaps not so much if you are moving to to the coast of California.

Does your spending per annum include taxes. California has higher taxes than many other states.

That said, I love living in California. For me, it's worth the expenses.

We will be there in a few weeks. Our daughter bought a 3 bedroom house in LA within the last year and we are going to spend a couple of weeks with her. It was a fixer-upper that cost $800k. She has already spent a lot of money fixing it up. The much larger house we bought in N. Yorkshire in 2017 cost half that plus our property taxes are about $2.8k/year. I expect her property taxes plus State taxes are much more.

She has been in California since 2013 and loves it, and we love visiting her. Until last year she was renting a 1 bedroom apartment in Santa Monica for about $2.5k per month.

 

[socca]

Any thoughts or pointers on how to investigate healthcare for someone not familiar with the American system would be much appreciated!

Some U.S. states allow residents to purchase a health insurance policy that does not fully comply with the [Affordable] Care Act. These policies are often called 'short-term' policies, although they can last up to 364 days in some states that allow them. These policies are medically underwritten, so coverage for pre-existing conditions is excluded. I have purchased these policies since 2007, except for a year-and-a-half when I purchased an [A]CA policy. I went back to purchasing non-[A]CA policies when the [A]CA policies became unaffordable for me according the [A]CA's own standard for what constitutes 'affordability'. The past couple of years I have paid thousands of dollars in penalties for not having an [A]CA policy but nevertheless have come out far ahead in overall cost, which shows how relatively inexpensive the non-[A]CA policies are. There will be no such penalties beginning in 2019.

For my personal health care budgeting, I use the Medicare premiums as a guideline even though I'm quite a few years from Medicare. In 2019, my health insurance premiums will be far below Medicare, whereas if I purchased an [A]CA policy my premiums would be far above Medicare. I figure that it all evens out in the long run.

I definitely can't categorically recommend short-term health insurance for you - there are lots of things to consider. Furthermore, the health insurance situation in the U.S. is extremely unstable at the moment, which makes any kind of intermediate- or long-term planning difficult.

Good luck!

 

[MRG]

Also possibly consider Vancouver/Victoria in BC or southern Ontario (Toronto or Niagara). Healthcare much less of an issue, tax implications likely simpler and easy travel both to US and back to UK.

+1

That would seem to be less of a shock.

 

[samclem]

+1

That would seem to be less of a shock.

If moving to escape damp, cool British weather, you should probably scratch Vancouver off the list.

 

[Adventurer]

If moving to escape damp, cool British weather, you should probably scratch Vancouver off the list.

Yes, British weather plays a part! I love Vancouver, but the weather seems rather too British in style!

 

[Adventurer]

I find it interesting that you state that California will be cheaper than the UK. That's true if you are moving from London to the Mojave desert.... Perhaps not so much if you are moving to to the coast of California.

Does your spending per annum include taxes. California has higher taxes than many other states.

That said, I love living in California. For me, it's worth the expenses.

I guess you’re right, California is expensive. But, property still cheaper than where we are, just outside London.

We’ve been considering so many different places, I know it’s s privileged position to be. Lifestyle, weather, leisure etc all to be taken into consideration.

Our family are spread all over the world now, and we’ve already lived in multiple countries over the last 20 years, so there’s nowhere (yet) that feels like a proper home base, and not just a temporary arrangement to suit work etc ...

 

[Adventurer]

Some U.S. states allow residents to purchase a health insurance policy that does not fully comply with the [Affordable] Care Act. These policies are often called 'short-term' policies, although they can last up to 364 days in some states that allow them. These policies are medically underwritten, so coverage for pre-existing conditions is excluded. I have purchased these policies since 2007, except for a year-and-a-half when I purchased an [A]CA policy. I went back to purchasing non-[A]CA policies when the [A]CA policies became unaffordable for me according the [A]CA's own standard for what constitutes 'affordability'. The past couple of years I have paid thousands of dollars in penalties for not having an [A]CA policy but nevertheless have come out far ahead in overall cost, which shows how relatively inexpensive the non-[A]CA policies are. There will be no such penalties beginning in 2019.

For my personal health care budgeting, I use the Medicare premiums as a guideline even though I'm quite a few years from Medicare. In 2019, my health insurance premiums will be far below Medicare, whereas if I purchased an [A]CA policy my premiums would be far above Medicare. I figure that it all evens out in the long run.

I definitely can't categorically recommend short-term health insurance for you - there are lots of things to consider. Furthermore, the health insurance situation in the U.S. is extremely unstable at the moment, which makes any kind of intermediate- or long-term planning difficult.

Good luck!

Thanks, that’s very interesting and useful.

 

[Scuba]

We live in a coastal So CA city. Beachfront condos in our area that are 1,100-1,800 sq ft sell for $1-$1.5 million, and although property tax rates are relatively low, we are still paying over $14K per year for property taxes. Our healthcare costs are $15-$20K/year and we are still in our 50’s with no chronic conditions. Most of that cost is simply healthcare premiums.

We always planned to stay in So CA forever, and there are many things we still love about it - weather (except for the winter), friends, diversity of people and experiences. However the state is not managed in a fiscally responsible manner and costs are accelerating faster than we expected. Also the voters continue to pass more and more bond issues for various purposes which just add to the cost of living. CA is socially progressive with little to no regard for costs. This is becoming more frustrating for us. We don’t have quite the amount of assets that you do, but we aren’t too far away not counting any equity in our home.

I agree with others that at your asset level, you can afford to move to CA if you are happy with a moderate lifestyle. We live in a 1,550 sq ft condo and drive 2007 cars. We are comfortable but don’t feel wealthy. While we likely have enough wealth to continue living in CA indefinitely, we may choose not to as value for money is important to us.

 

[Sunset]

OP - Since you have choice of where you want to live, you might consider how different States are in terms of State income taxes.
Hover over the States with this site, and see: Income Tax Rates By State 2019 - Tax-Rates.org

It goes from 0% to 13.3% , note the that IL just increased from 3.75 to 4.95% and that is not reflected in the numbers.

 

[Adventurer]

OP - Since you have choice of where you want to live, you might consider how different States are in terms of State income taxes.
Hover over the States with this site, and see: Income Tax Rates By State 2019 - Tax-Rates.org

It goes from 0% to 13.3% , note the that IL just increased from 3.75 to 4.95% and that is not reflected in the numbers.

This is great, thank you. I can now model different options ... and perhaps plan a long holiday first to investigate! That’s the beauty of having time. Either way, we would plan to rent somewhere initially to get the feel before buying

Once again, thanks!