Living abroad for a few years in the cheaper countries...

[Alan]

Don't forget the annual foreign income exclusion of approx $107,000 per person.

That only applies Foreign Earned Income so for retirees it usually doesn't apply, plus you can only use the FEIE or foreign tax credits (FTCs) (form 1116) so if you have foreign earned income plus dividends, interest etc then FTCs are best. Many countries tax your worldwide income so when filing for FTCs you mark the box "Resourced by Treaty" on form 1116 so that the foreign tax you pay on your US source income can be deducted on your US return.

 

[scrinch]

You will be taxed by the US as if you stayed.
The house makes it awkward, because if you didn't have it, you could move to a State that does not have income tax. Otherwise most states will be keen for you to continue to pay taxes to them while you live outside the US.

Being a long distant landlord is no treat, who will manage the place ? repairs, interview new tenants, etc. After being away for 5 years, will you really want to return to that house ?

We lived overseas twice during my career, for a total of nine years. Both times we kept our house in California and rented it out. Both times when we returned we had significant repair/refurbishment costs from renters not taking care of the house like an owner would. This, despite professional management companies and reasonable-seeming renters. Nonetheless I'm sitting in that house as I write this, having owned the place since 1985.

We had no problems with double taxation or being charged for state taxes, however. There is tax code/regulation dealing with expat situations. If you pay attention, you can easily and legally avoid paying any more taxes than you would have living in the US.

 

[JakeinChina]

I would totally look into living in Eastern Europe, esp since you have the right to live there and receive free health care. Plus, if you're a single guy, Eastern Europe would be easier to meet some cuties and mingle. Prague and Budapest would be tops on my list.

I wouldn't just go with the cheapest country to save more money. Usually, you get what you pay for.

Whatever country you choose, I would go for it. Life is short and you will regret not doing it. I lives abroad for 20 years and it was the best years of my life and have no regrets.

Good luck!

 

[LXEX55]

I don't know about the cost of living or medical care or whatever, but the girls in Thailand are fantastic.

 

[Spanky]

How about the Philippines? They welcome expats and the cost of living is really cheap.
https://www.expatexchange.com/philippines/liveinphilippines.html

 

[JakeinChina]

I don't know about the cost of living or medical care or whatever, but the girls in Thailand are fantastic.

That scene gets old quick and eventually you want more out of life then just sitting in a Thai bar with a bunch of loser Brits and Yanks feeling good about yourself by flirting with the local girls lol.

 

[brett]

Do it. Consider this. Retirement homes are full of people who wanted to travel and do certain things in retirement.

Do you want to be the richest person in the nursing home?

Go for it. Why limit yourself to one country. Spend 6 months, a year or more in several countries on your list.

Since retiring early we travel as much as we possibly can to all sorts for places on our bucket list. Why...because we have the desire and good health to do it. Don't know how long we will be blessed with this so was are doing it. We prioritize places on our bucket list and want to return list well before the cost of living. It all seems to average out in the end. A month in Thailand and a month in Austrralia have yield different spends for us but the average is reasonable.

We spend winters in warm climates. SE Asia, Mexico, Central America.

There are some very nice places in Panama that do not get the heat and the humidly of sea level areas. Boquette, in the hills near David comes to mind.

We came to the conclusion a long time ago that experiences trump possessions.

 

[Nemo2]

Don't know how long we will be blessed with this

Aphorism #1: "It's always later than you think".

 

[truenorth418]

If you can’t decide, try spending a few months a year in each if the places you love. Use Airbnb or HomeAway for extended stays. Use your temporary homes as home base to explore nearby attractions. You could split your time between less expensive areas like Latin America or Eastern Europe and pricier options. You could avoid the seasons this way too by matching the location and time of year with the type of weather you enjoy. Then after a couple of years you’ll have enough experience with different places maybe you’ll choose to settle down on one of the places you enjoyed most.

This is what I was doing prior to covid lockdowns and what I will return to once/if things open up again.

 

[ATX78701]

In Mexico right now trying it out for 6 months. My opinion about what I would do long term here and my expectations of the country have all changed versus my initial thoughts. And I think they will continue to change, too, as I learn more about the country, the people, the culture, etc and also myself and what I want in a bit of retirement abroad.

I sold all tangible assets stateside before coming south. The thought of renting a house out and worrying about damage was going to keep me up at night. Nothing in storage either except for a couple of boxes of photos stored with friends.

Keep an eye out on some changes in the tax landscape around net worth taxes. Argentina come to mind. In Europe, Spain also comes to mind. These taxes probably can be avoided as a tourist but might snare you if you decide to become a citizen or maybe even a resident. Note: none of this is tax advice, just a heads up to look for more than income and property and VAT.

 

[Poopycat]

In Mexico right now trying it out for 6 months. My opinion about what I would do long term here and my expectations of the country have all changed versus my initial thoughts. And I think they will continue to change, too, as I learn more about the country, the people, the culture, etc and also myself and what I want in a bit of retirement abroad.

Have your thoughts changed for the better or worse?

 

[JakeinChina]

In Mexico right now trying it out for 6 months. My opinion about what I would do long term here and my expectations of the country have all changed versus my initial thoughts. And I think they will continue to change, too, as I learn more about the country, the people, the culture, etc and also myself and what I want in a bit of retirement abroad.

I sold all tangible assets stateside before coming south. The thought of renting a house out and worrying about damage was going to keep me up at night. Nothing in storage either except for a couple of boxes of photos stored with friends.

Keep an eye out on some changes in the tax landscape around net worth taxes. Argentina come to mind. In Europe, Spain also comes to mind. These taxes probably can be avoided as a tourist but might snare you if you decide to become a citizen or maybe even a resident. Note: none of this is tax advice, just a heads up to look for more than income and property and VAT.

So what has changed now based off of your initial thoughts on Mexico and living abroad in general?

 

[ATX78701]

Have your thoughts changed for the better or worse?

So what has changed now based off of your initial thoughts on Mexico and living abroad in general?

After visiting several cities in MX for several years, I thought it best to rent for a bit and then buy a place, furnish it, settle in like I would if I had moved to a new city in the US.

So change number revolves that rent then buy decision. It seems to me that the real estate market here is very different...homes/apartments can stay on the market for years because there is so much new construction. I also am finding the housing stock doesn’t have the attention to detail to which I expect (bear in mind I live in a mid rise that targets expats or upper middle class Mexicans) and I’m amazed at some of the construction decisions. So I think I’ll be a renter for a long time every though that goes against my ingrained belief that home ownership is important.

As far as Mexico, I knew from my visits and research that it’s a loud country: dogs, parties, fireworks (yes, fireworks just occurred on a Monday night at 9:12 PM). Second item that changed my perception... it can be REALLY loud. It could also be that I chose to rent in the more expat friendly, more people in their 20s, 30s, and 40s so there is more bar noise at times, but the thought process of neighbors coming in at 4 AM on Saturday night/Sunday morning and then cranking up their music to a super loud volume...that’s where I’m struggling a bit. Ear plugs and a sound machine are great to offset, but it’s not exactly how I imagined living in a different country.

Don’t get me wrong, I’m blessed to have this experience and have zero regrets about trying it and will continue to explore this city, the country and possibly other countries when COVID eases up.

This forum taught me the concept of “go-go years, slow-go years and no-go years”. So noise or no noise, I’m going to live while I can before my years become completely no-go years.

 

[smalltownguy1]

No doubt about it. Great place to be a single man.

I’m in Medellin now. For my second 2 week trip since November.
I also lived about 4 months in San Jose CR last year and spent about five months in Manila Cebu and Palawan Philippines.
I had an apartment in San Jose and the rent increased by 40% the second month and that was the monththe 13% National tax hit as well.
I have a paid for cabin on a lake in Texas and Tricare as well as blue cross blue shield insurance( that work overseas).
The experience of renting soured me on renting in another country as I was “gringo taxed“ every step of the way.
Hotels and Airbnb are easier and cheaper as when you rent you are tied down as much by red tape as by your “stuff” I have to much “stuff” in the USA to start having too much “stuff” in another country.

 

[Retch The Grate]

I don't know about the cost of living or medical care or whatever, but the girls in Thailand are fantastic.

Cost of living depends on where you are willing to live and how much of a western lifestyle you want. My uncle has a gorgeous villa in a little beach town and lives a great retirement, but if he wanted the same lifestyle in Bangkok where our family friends live, he would be paying a lot more. His wife is Thai and the food they eat is local and inexpensive, but if he were buying imported steaks and whatnot on the regular, it would cost about as much as the US. His pickup truck was crazy expensive to import. Medical care is much cheaper than the US, but he was moving from England, so...

 

[bmcgonig]

Agree with this.

I had an IPA at a type of beer garden in Bangkok two years ago and it was the equivalent of $11

A "big chang", the local beer that comes in a large bottle is around $1-2

.

Cost of living depends on where you are willing to live and how much of a western lifestyle you want. My uncle has a gorgeous villa in a little beach town and lives a great retirement, but if he wanted the same lifestyle in Bangkok where our family friends live, he would be paying a lot more. His wife is Thai and the food they eat is local and inexpensive, but if he were buying imported steaks and whatnot on the regular, it would cost about as much as the US. His pickup truck was crazy expensive to import. Medical care is much cheaper than the US, but he was moving from England, so...

 

[brett]

We have spent some time time in Thailand. Mostly the south.

We enjoy Thai food. We typically eat at small Thai family run restaurants. If you want to eat western food it costs about 3X or more in our experience.

A western breakfast for two was usually 300-400 Bhat for two. Dinner at one our favourite restaurants was 275-425 bhat for two. That included a cold Chang and a pineapple ice drink. This would be in places like Ko Lanta or Baan Krut

Big bottle of Chang....yes $1-$2. Had at least one every day. In five years of spending a few days each winter in Bangkok on our way south we have never paid $11 for a beer. Nor would we. We would expect to pay $3-4 tops for a Chang.

 

[jim584672]

If you move out of the US, what about your bank and brokerage accounts? Do you need to close them all because you are no longer a US resident. My state requires notification within 10 days for a permanent change of address for the DMV, how do you all handle the logistics of an address out of the US?

I would want to have no US presence, no house or ties.

 

[Alan]

If you move out of the US, what about your bank and brokerage accounts? Do you need to close them all because you are no longer a US resident. My state requires notification within 10 days for a permanent change of address for the DMV, how do you all handle the logistics of an address out of the US?

I would want to have no US presence, no house or ties.

Before we left I made sure I had a bank and a brokerage that allowed overseas customers. The bank we had been with for a good few years did not allow overseas customers so I switched to one that did, linking it to my pension provider and brokerage (Vanguard). Most Vanguard ETFs also report into HMRC so dividends and cap gains get preferential tax rates in the UK.

 

[Green Papaya]

Do it. Consider this. Retirement homes are full of people who wanted to travel and do certain things in retirement.

Do you want to be the richest person in the nursing home?

Go for it. Why limit yourself to one country. Spend 6 months, a year or more in several countries on your list.

Since retiring early we travel as much as we possibly can to all sorts for places on our bucket list. Why...because we have the desire and good health to do it. Don't know how long we will be blessed with this so was are doing it. We prioritize places on our bucket list and want to return list well before the cost of living. It all seems to average out in the end. A month in Thailand and a month in Austrralia have yield different spends for us but the average is reasonable.

We spend winters in warm climates. SE Asia, Mexico, Central America.

There are some very nice places in Panama that do not get the heat and the humidly of sea level areas. Boquette, in the hills near David comes to mind.

We came to the conclusion a long time ago that experiences trump possessions.

We are considering something similar, keeping a home base in US but travelling most of the year to Australia or SE Asia, a couple of months in each country at a time. We will buy health insurance for the time we are in US, but how do you manage health insurance while traveling overseas?

 

[brett]

We are considering something similar, keeping a home base in US but travelling most of the year to Australia or SE Asia, a couple of months in each country at a time. We will buy health insurance for the time we are in US, but how do you manage health insurance while traveling overseas?

We sold our home and traveled internationally for six to seven months. We live in Canada. We shopped around a fair bit for out of country medical/evac. At that time we had perfect health...no existing, no prescriptions. We dealt direct with an insurer. Got a six month plus policy that offered a 30 percent discount if we selected a 3 or 4K (cannot remember which) deductable. I would have selected a 10K deductable if it had been available and if the discount percentage made sense. We are primarily concerned about the 'big' numbers when it comes to this type of insurance. We then came back and rented a furnished apt. for three months where we had previously lived-where we had universal health insurance.

My spouse was hospitalized and treated in Kuala Lumpur for cracked vertebrae. The standard of care was second to none. She has a health care background and was very impressed.

After one winter trip to SE Asia convinced us to return for the next five winters. Mostly Thailand, but we also love Vietnam. Same for Australia. Our route now is Thailand (and/or Vietnam, etc) first. Then we fly from Krabi in the south of Thailand to Gold Coast, Australia on Scoot (discount airline of Singapore Air). We return home from Sydney via Hawaii. We pick up inexpensive one way flights on Jetstar Australia (Qantas) to Honolulu. Spend a few days, then fly back to Canada.

 

[Alan]

We are considering something similar, keeping a home base in US but travelling most of the year to Australia or SE Asia, a couple of months in each country at a time. We will buy health insurance for the time we are in US, but how do you manage health insurance while traveling overseas?

For the first few years after retiring we spent months at a time in Canada, UK, EU and Australia. Our BCBS PPO plan included overseas coverage. Before embarking on a multi-month overseas trip I would go onto the BCBS website and for the towns we would be spending 2 or more weeks I would look up in-network doctors and hospitals and save or print the details offline.

The only country I couldn’t find coverage for with our BCBS insurance was Vanuatu so we took out travel insurance for the week we spent there.

 

[brett]

We have also been in the position where we have had to extend our out of country health insurance. We traveled for longer than we expected. We were fortunate that it only took an email to our insurer to extend our coverage for an extra week. I was surprised at how accommodating and how responsive they were. We needed fast turnaround in order to take advantage of a last minute travel opportunity.

 

[Green Papaya]

Another question.
We live in TX, no state income taxes. I want to travel internationally for 9 months, then return and stay in CA for 3 months. In that scenario, if I want to do Roth conversion, would I be considered a CA resident therefore required to pay CA state income taxes for the Roth amount?

 

[Out-to-Lunch]

Another question.
We live in TX, no state income taxes. I want to travel internationally for 9 months, then return and stay in CA for 3 months. In that scenario, if I want to do Roth conversion, would I be considered a CA resident therefore required to pay CA state income taxes for the Roth amount?

Why not do the conversions before the year in which you land in CA?