Retiring to the US from the UK ...?

[Adventurer]

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.

Hmm, does seem quite expensive. Might be time to look for alternative options from an overall value perspective.

Thanks to all for being so open with the numbers - what an amazing resource with people being so readily willing to offer up so much

 

[daylatedollarshort]

Hmm, does seem quite expensive. Might be time to look for alternative options from an overall value perspective.

Thanks to all for being so open with the numbers - what an amazing resource with people being so readily willing to offer up so much

The home prices tend to be lower if you move outside of the major coastal metro areas, which you can do if you are retired. The weather is still pretty nice up and down the coast. Here is a pleasant weather chart for reference-

https://kellegous.com/j/2014/02/03/pleasant-places/

We feel our taxes are pretty reasonable here in the Bay Area, especially considering all the great parks and public services. Most of the high costs here are in the housing prices and then other expenses aren't too much different than other major metro areas in the U.S. You can shop for groceries and gas at Costco, buy consumer goods from Costco or Amazon, utilities tend to be low due to mild weather, etc. We've run the numbers and except for housing I don't see our expenses dropping much if we moved outside California. With the ACA our medical expenses have overall been pretty reasonable, and for us Medicare seems like it will be, too.

Housing prices in San Francisco and the South Bay where the big tech companies are run about $1K a square foot, but the upscale suburbs are closer to $500 - $600 a square foot.

 

[OldShooter]

There is another thing to be afraid of: State and local government debt and pension liabilities.

Both Illinois and the city of Chicago are expected to go bankrupt. California is also at risk I think. Any resident of a bankrupt state or city is at risk for large and completely unpredictable tax increases in the future. The flip side of this, also a risk, is that property values within a bankrupt jurisdiction will plummet. Most likely, residents will enjoy both rides to one degree or another.

The bankruptcy of the city of Detroit is not quite apples-to-apples but it is close enough to give you a peek. We were there two or three years ago and at that point abandoned homes that had been burned were being left standing because the city didn't have the money to tear them down.

 

[BarbWire]

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/

You will find on this forum that there is much emphasis on the affordability aspect of health insurance under the ACA, but the other important aspect is: is the coverage any good?

For example, I chose to move away from my address of a decade because the only insurance provider (BCBS-Tx) had an HMO with a dreadful network -- and no out-of-network protections. (Is that important? Might be if you need a specialist and none are in network, or need a radiologist or anesthesiologist or emergency doc in a hospital). Also note that most states do not have any protections against the nasty practice of "balance billing."

Good luck with the research and move. I am a USC/UKC who has spent almost all of my life in the US, but if there is not absolute carnage after Brexit, I am strongly considering moving to the UK.

 

[ShokWaveRider]

The biggest issue facing the USA for the early retiree (and many others) by far is affordable healthcare available to all. The exception is those that have legacy company funded or a US government funded HC system (VA & Medicaid).

IMHO it should be priority 1 for getting sorted.

Once over 65, and IF one is eligible for Medicare, at least it is a known entity, while still not really affordable for some. We have elderly friends that cannot afford the premiums for supplements or are not eligible for advantage plans.

So as someone moving from a socialized system like the UK, it can be a daunting prospect. If it were me I would choose the Canadian system and visit the USA in the winter months. As a legal resident of Canada, one is entitled to good quality and most importantly affordable healthcare. When traveling a supplement can be purchased for a very reasonable price for up to 6 months. We did it for about 4 years before we became American citizens and decided to move and work here permanently.

 

[ShokWaveRider]

I am a USC/UKC who has spent almost all of my life in the US, but if there is not absolute carnage after Brexit, I am strongly considering moving to the UK.

Like you, I am also a UKC, USC and a CANC. DW is a USC and CANC. We would be in Canada if it were not so cold in the winter. We have also looked at the UK too, being as my DW is Canadian that could be a challenge.

Like you we are waiting for the Brexit issue to do whatever. I still have the Red EU Passport.

 

[Aiming_4_55]

Hmm, does seem quite expensive. Might be time to look for alternative options from an overall value perspective.

Thanks to all for being so open with the numbers - what an amazing resource with people being so readily willing to offer up so much

I'm in the Los Angeles/Southbay area, in a non-ocean front condo, about 10-15 minutes from the beach in a casual drive (8 minutes if I drive fast). 1500 sq ft, 2 Bedroom plus den and 2 bathrooms or 3 bedroom and 2 bathroom in my neighborhood can be had for $700 - 900k depends on taste and upgrades. Monthly assessment is about $400 (pool, exterior maintenance, water, cable, insurance), then taxes about $8k a year.

 

[Chuckanut]

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.

States with a low or no income tax often have other high taxes to make up for it. Often these additional taxes are regressive, hitting low and middle income people the hardest. It's best to look at the total tax burden, though this calculation gets tougher.

https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494/

One simple ratio known as the “tax burden” helps cut through the confusion. Unlike tax rates, which vary widely based on an individual’s circumstances, tax burden measures the proportion of total personal income that residents pay toward state and local taxes. And it isn’t uniform across the U.S., either.

 

[Sunset]

The biggest issue facing the USA for the early retiree (and many others) by far is affordable healthcare available to all. The exception is those that have legacy company funded or a US government funded HC system (VA & Medicaid).

IMHO it should be priority 1 for getting sorted.

Once over 65, and IF one is eligible for Medicare, at least it is a known entity, while still not really affordable for some. We have elderly friends that cannot afford the premiums for supplements or are not eligible for advantage plans.

So as someone moving from a socialized system like the UK, it can be a daunting prospect. If it were me I would choose the Canadian system and visit the USA in the winter months. As a legal resident of Canada, one is entitled to good quality and most importantly affordable healthcare. When traveling a supplement can be purchased for a very reasonable price for up to 6 months. We did it for about 4 years before we became American citizens and decided to move and work here permanently.

OP - if you decide to first move to Canada and visit the USA for warm weather in the Winter, then just like the States, Canada has big differences depending upon where you live.
Alberta has 10% Provincial income tax and 0% sales tax.
Ontario has graduated Provincial income tax which gets steep, and a 7% sales tax

If I was moving to Canada, I'd seriously look at Alberta for $$$ reasons. This site will show you all the provinces from the menu options.
https://calculatorscanada.ca/ontario-income-tax-calculator/

 

[samclem]

A >nice< thing about Southern California is that skiable mountains, sunny beaches, desert open spaces, big-city culture and entertainment, etc are all within a circle of about 250 miles diameter. The >bad< thing is this is well known and lots of people have flooded in. The roads and many public spaces are congested and the real estate costs are high. As a retiree, the road congestion is a bit less of a problem (you can avoid the worst driving times), but many of the other issues remain. I grew up in Southern California, I appreciate why many people choose to live there (the weather is consistently gorgeous), but it wouldn't be my choice now.

 

[OldShooter]

States with a low or no income tax often have other high taxes to make up for it. Often these additional taxes are regressive, hitting low and middle income people the hardest. It's best to look at the total tax burden, though this calculation gets tougher ...

With respect, this makes no sense. "Total tax burden" is simply one size that fits none.

The OP should look at his tax situation to the extent possible. Whether others in different economic circumstances pay different amounts is irrelevant to his decision. But it is definitely true that other taxes, like real estate, sales, estate, etc. relevant to his situation must also be considered. This includes looking at what goods are subject to sales tax since that varies quite a bit from state to state.

 

[6miths]

OP - if you decide to first move to Canada and visit the USA for warm weather in the Winter, then just like the States, Canada has big differences depending upon where you live.
Alberta has 10% Provincial income tax and 0% sales tax.
Ontario has graduated Provincial income tax which gets steep, and a 7% sales tax

If I was moving to Canada, I'd seriously look at Alberta for $$$ reasons. This site will show you all the provinces from the menu options.
https://calculatorscanada.ca/ontario-income-tax-calculator/

As a retiree, income tax hopefully becomes less of an issue. Alberta has the beauty of the Rockies but one doesn't get to see much water, the winters are truly cold and long, one will likely incur additional travel costs, and although the people are friendly, it is much less cosmopolitan than Vancouver, Toronto or Montreal.

 

[Sunset]

As a retiree, income tax hopefully becomes less of an issue. Alberta has the beauty of the Rockies but one doesn't get to see much water, the winters are truly cold and long, one will likely incur additional travel costs, and although the people are friendly, it is much less cosmopolitan than Vancouver, Toronto or Montreal.

I actually like Ottawa better than Toronto, and housing costs a lot less, plus it's close to USA border.

OP might have an issue in Quebec due to the language rules.

 

[kite_rider]

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.

This is interesting. Does Canada provide free (or cheap) healthcare to every foreigner or just British citizens? Just curious about how much less of an issue it actually is.

 

[Sunset]

This is interesting. Does Canada provide free (or cheap) healthcare to every foreigner or just British citizens? Just curious about how much less of an issue it actually is.

It's a provincial thing, but I know Que and Ontario are based on residency, so after you have lived in Ontario for a few months (I think 6 or less) then you have it.
It's for anyone living there, not just UK folks.

Hopefully a Canadian or new Canadian resident can explain better.

 

[Ian S]

It's a provincial thing, but I know Que and Ontario are based on residency, so after you have lived in Ontario for a few months (I think 6 or less) then you have it.
It's for anyone living there, not just UK folks.

Hopefully a Canadian or new Canadian resident can explain better.

A foreign national retiring to Canada is very difficult from my understanding. Wealthy investors might have a chance but mostly Canada wants skilled young workers.

 

[kite_rider]

I was always curious about Canadian immigration. My DW looked into it about 15 years ago and it didn't seem easy at all for American citizens to migrate north.

OTOH, a large number of DW's relatives (from Asia) hold Canadian passports even though none of them actually live there. We see them once in in while when they pass through on their way to California after doing some sort of 'check in' that they need to do periodically up there. I'm guessing they had to dump a wad of cash to get those passports (never asked directly); they sort of imply that Canada is their back up plan if things get crazy in Asia.

It all seems pretty puzzling to me..

 

[Sunset]

If you have relatives living in Canada as Canadian citizens, they can sponsor many relatives: parents, grandparents, grandchildren, spouses, etc.

https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada.html

They did get rid of their buy yourself citizenship program at least partially.

 

[DrRoy]

Your WD would be fine if your spending estimate is complete. Did you include taxes, medical, housing, contingencies, etc?

 

[tbbarton]

Health Plan

If you qualify for a health plan under the ACA, then it is pretty simple and straight forward. I would guess the move hear would qualify as “life event” so you could enroll immediately in a plan. Plans are state specific so you would have to decide on the state first.

We live in Florida and have a bronze plan with BCBS of Florida (Florida Blue) and we pay $2600 per month for 2 adults and 2 children. For the adults only i would assume about half.

The key question is what status do you have to have to qualify for a plan in the state you decide to move to and how long does it take to acquire that status

 

[jayanu]

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 the 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!!

Being a Scientist/Engineer, I would ask you to decide your list of requirements. Though you have already thought through, so it seems, to be focused on CA and CO. Would be useful to know why those two states.

Frew things one would consider (not in any particular order) are:
1) Year around Weather/Climate - how many sunny days, how much rain, how much snow, how cold/hot etc. Sun does impact the mood. Seattle supposedly has the "highest" rate of suicides with it gloomy (like London) climate.

Californians (warm weather) are, on the average, more friendly, cheerful and friendly (I studied at UCLA) than, say a Chicagoan or New Yorker ((cold weather).

2) Job/Entrepreneurship opportunity
Clearly, Silicon Valley and Boston, and NYC are a hotbed for the IT entrepreneurship and jobs.

3) Education for kids and even for you - campus as well as online and even audit courses. East coast has the majority of the Ivy League colleges but then Stanford, Caltech, Berkley, USC, UC system are top notch too.

4) Cultural activities - Museums, Theaters, etc.
again, "older" City like NYC, Boston, DC etc. would be rich along with top cities in CA.

5) Sports - there is is no national Cricket but there are many Cricket teams and matches where you have expats from Britain, and its original colonies like India, Pakistan, Caribbean's etc. I was shocked to see a match going in a park in NJ where I went for a walk!

However, if you like the USA national sports like baseball, football, ice hockey etc. then location may depend on your favorite team if you intend to have a season pass.

Then there are many other sports activities like hiking, mountaineering, kayaking, fishing, sailin, skiing etc. If you enjoy them then that should be in your selection criteria

6) Of course the cost! Biggest are typically Medical and housing. At your age - the medical can be $17-$20K+/year depending on the state you are in (but then you are saving in the UK's 50% taxes too!). I would keep that as a guideline. Lower than that may not give you good choices.

Housing: Condos typically can be cheaper than a single family home but the property tax can be high depending on location. I was paying $18K/year in Long Island, New York for a four bedroom Split level ~$500K home in 2006.

The same house on the beach in Delaware would have cost me 60% and my property tax would have been ~$1,700/year because Delaware is the corporate mecca for registration. A huge number of the US corporations are registered there (like Cruise ships are registered in the Bahamas, Bermuda etc,). And the weather in Delaware would have been far better than in NY.

If you choose CA then renting possibly maybe a good option unless you want to rely on ever going up prices to make a profit on your investment in hot areas of CA.

Income/Sales Tax: This can vary a lot as someone gave you a link already.
With the new tax laws, the Family deduction is $24K meaning itemization may not help and the property and local tax are now capped at $10K but most homes in a major neighborhood would cost more than $1M as you mentioned your daughter's fixer-upper is $800K!

Then there are taxes (in retirement) on your retirement income of Pension, Social Security, RMD from your IRAs (at age 70.5). Some states give a partial exception, some give none and state like PA does not have any income tax on retirement income. In Alaska the state gives you money - Oil Money to keep you in cold state to work!

Transportation cost: In a state like CA you must have a car and a huge transportation cost vs. in NYC or Chicago or even possibly Boston and Portland, Oregon with extensive public transportation but then the weather is not as good as CA. I must admit I was biased for the CA weather until I moved to Chicago and the four seasons vs. monotonous weather of CA was a pleasant surprise. FL can be hot and muggy in summer. Snowbirds go to FL in winter but come back to the east coast home in summer!

Insurance cost: You need Auto and Home/Rental insurance and umbrellas insurance. This can be expensive in states like CA. I moved from NJ to Lancaster, PA to a CCRC (Willow Valley Community) and my cost of that became half.

Inheritance tax: Federal "death tax" can give you combined ~$10.4M exemption but states do vary. Until recently NJ had only $600K exemption! Most, but not all, matching the Federal limit. PA, though does not have income tax on the retirement income, it does have 4% inheritance tax!

Food Cost: I don't think this is a major issue for most of us and certainly not with your assets.

US News and World has an annual issue of cities to live, retire as well as on best doctors, hospitals and medical care that you may want to look at.

Lancaster, PA was rated number 1 for the retirees.

I hope this gives you food for thought if you want to make a decision based on analysis vs. emotion. Which may not be any better anyway - heart typically wins over the brain!

Best of Luck.
Love
Jay Shah

 

[RobLJ]

We like Reno a lot (1/2 to 1/3 cost of Bay Area housing); great hiking; skiing in 30 minutes; 300 days of sun (but not this year, given this winter). If you want a great orchestra or theater, not so much; great music concerts however. And Bay Area is 3.5 hours away.

Just a thought. But our grandbaby is 3.5 hours away in the Cali Central Valley (which is a lot like where I grew up in Oklahoma).
Edit: supposedly the schools are not very good, although University of Nevada is quite good. So if you have dependent kids, that's a big issue, I'm sure.

 

[RobLJ]

You can't beat Colorado either (Co Springs; Boulder; maybe Ft. Collins if you don't mind smaller cities). We had a cabin in Canon City that we sold when we moved to Reno. (Granddad built a summer cabin below Aspen and west of Carbondale on the Crystal River when I was 6 that was paradise, but it was very rural. I haven't found anywhere prettier in the US, though, and the trout were dumber than rocks.)

 

[Adventurer]

Thanks all for the many inputs. All really useful with the decision making process. I can see it’s going to be a lot more complicated than I initially thought! Healthcare being the major stumbling block. Well, first I’ll finish work in the summer, decompress for a bit, we have a few short trips lined up with the kids over the summer, and then we’ll have the mental space to decide.