Should you retire overseas

[Sojourning]

Explanade, Ireland went through the recession like everywhere else but they have pretty much recovered from that. In general, the cost of living in Ireland and the UK remains higher than in the USA. Compare numbers here:
Cost of Living Index by Country 2015

DFA, I agree you do not get 4 real seasons with real cold and real heat. I prefer 4 real seasons but if you are happy with more or less constant spring and fall, then it will suit you. What I found I missed the most was a real summer.

You can't 'plan' a barbecue for next Saturday for example as you would in July or August in the USA. You just can't count on the weather being any good. Here's an amusing tidbit. More convertibles are sold in the UK than in any other country in Europe and yet they pretty much get the lousiest weather for convertibles. Nothing like being optomistic I guess.

Your budget should be more than adequate, so I don't see any problems really. I just wondered why Ireland. sounds like you have covered the bases pretty well. No doubt you will find a few little surprises but that's to be expected. Your plan sounds fine to me as long as you rent for at least that first year.

 

[Meadbh]

Why is the cost of living so high in Ireland?

I thought they were economically hurting more than other EU countries in 2008.

Here are a few reasons.
1. Ireland is a smallish island. While the Republic of Ireland has an export driven economy (computers, pharmaceuticals, medical devices, agricultural products), many everyday items are not economically manufactured there and must be flown or shipped in.
2. There are few economies of scale.
3. As in many European countries, despite austerity after the banking crisis, there still is a more generous social contract with regard to benefits, wages, vacations, social services, education, etc. The unemployment rate rose from 3% in 2006 to over 20% after the crash. It is now 12.5% despite mass emigration in the past 7 years. That's a lot of unemployment assistance.
4. The Irish economy is dichotomous with a large globally competitive sector of multinationals with European headquarters there (e.g. Google, HP, Intel, Apple, Pfizer, Abbott) and smaller, often inefficient local industries. The global sector is strongly tied to the USA economy. Such enterprises are attracted by low corporate tax rates and an educated, science focused, English speaking population.
5. Personal income taxes in Ireland are quite high due to #s 1-3.
6. Land and property ownership are enormously important in the psyche of Irish people. There are complex historical reasons for that. It was a contributing factor to the property bubble during the Celtic Tiger. While property prices crashed in 2007-2010 to ~50% of their previous heights, they are creeping up again and have never been "cheap" by US standards in recent times.

 

[explanade]

I remember the sticker shock of going to some restaurants in Ireland, almost 20 years ago.

This was before they adopted the Euro but was really surprised.

 

[Alan]

DFA,

I was thinking about your plans to try out Ireland and would like to make the following comments.

1. I think it will be a great adventure. We've been to Ireland 3 times, last time for 4 weeks in May, 2013 when we rented 2 different houses in Donegal and Connemara. We love Ireland, the countryside and the people.

2. In 2013 we sailed over on the QE and back on the QM2 and it was excellent. 8 days at sea so we booked inside cabins, $500 each going over in March on the QE and $1,100 coming back in October on the QM2. I think it is a great choice for taking your dogs with you.

3. You've obviously looked into the tax implications of a permanent move, but could I suggest that you may not be liable for Irish taxes the first year you are there, particularly if you go over on the March sailing of the QE. That first year living away from the USA you will probably be resident for tax purposes in the USA as well as Ireland so the tie-break is where you are domiciled for that year, and if you weren't born in Ireland, plus your income is derived in the USA, then I expect you will only have to pay US taxes. (you also say that you have not made a decision to make Ireland your permanent home). See the "substantial presence test" on the IRS website.

You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:

1. 31 days during the current year, and
2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
   • All the days you were present in the current year, and
   • 1/3 of the days you were present in the first year before the current year, and
   • 1/6 of the days you were present in the second year before the current year.

Example:
You were physically present in the United States on 120 days in each of the years 2010, 2011, and 2012. To determine if you meet the substantial presence test for 2012, count the full 120 days of presence in 2012, 40 days in 2011 (1/3 of 120), and 20 days in 2010 (1/6 of 120). Since the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2012.

4. One last note is to check to see if you will be liable for the local taxes in the house you rent for a year. (equivalent to US property taxes). I mention this because I don't know Irish rules, but in the UK if a rental house is not a holiday home (many tenants in a year) then it is the tenant that is responsible for paying the local taxes. This is no big deal, just beware of the possibility and check ahead of time so you don't get surprised when you get there.

All the very best of luck in your endeavors.

 

[Sojourning]

Re Irish unemployment, I have read some articles about how desperate some have become.

Many young people who are eligible for a WHV (working holiday visa) are using the WHV route to go to places like Canada and Australia with the intent of trying to stay beyond the terms of the WHV. Read more here: 10,000 Canadian visas expected to be snapped up by the Irish

It gets them in the door and with some luck they may be able to turn it into something more permanent. Of course many will not and will have to return to Ireland where they will of course have no job.

 

[nuke_diver]

Super interesting read here. I would like to retire overseas as it would feel like a great adventure but I think the odds are near 0 for that. I would very much like to move back to Canada for the same reasons as quoted below

Living in another country, even one that speaks the same language, is always going to be a culture different to what you grew up with.

However I think it is unlikely as well since while my wife is not US born this is her country and the only one she's ever been a citizen and in addition she concerns herself with both the cost of living in Canada (which isn't as great as she thinks when you factor in the cost of HC here in the US) and the tax situation which is more complex (US citizens living abroad). I've tried to play the global warming card too since we live in a very nice area weatherwise and everywhere in Canada will be wetter/colder than here at least for now but no luck yet.

In her case the best would be to move there for a few months and see if her opinion changes. Because I've been here for over 20 years now I would not get too much of a pension in Canada but it would be non zero

 

[sengsational]

Following Your Heart

I listened to a recent podcast of Invisibility called "categories" and one section in the 2nd half of the program pretty much summarized our situation.

Even though we have now lived nearly half of our lives in the USA, we have developed a very strong pull to move back to the UK since just before we retired. This is very natural and happens to many folks once they get older, this desire to be back in the familiar surrounds of where they grew up, and it is quite independent of weather, finances, language, race etc.

Living in another country, even one that speaks the same language, is always going to be a culture different to what you grew up with. Eventually you may end up simply being tired of always having to explain yourself (I still fail miserably at a drive through after living in the US for 28 years, and after one spoken word people know I'm not from around here).

We have had a great life in the USA, raised 2 children here, have been really welcomed everywhere we've lived and worked (in Louisiana and Texas). But we still don't feel like we fit in.

Over the last 5 years we have spent weeks or months at a time in other parts of the USA, Canada, Ireland, Australia, France and England. (escaping the Texas summers).

We are luckier than most because we have been able to afford these experiences and starting 2016 we plan to set up a permanent place in England (North Yorkshire) and split our time between there and here.

If England is where you feel most relaxed, then you'll probably be better off there. That is, if leaving your kids behind doesn't cause any angst.

If one is "chill", one will probably be happier and live longer. That's not to say "bored", but as long as you've got something to get out of bed for each day (usually that's "your peeps" aka your close friends and family and your true interests), then living in a place that has less stress is probably better.

Your situation is quite different than some people that want to move for financial reasons, or think they'll "like it there". Hedonic adaptation means the warm days will fade into the background. There's a guy I know who is moving out of the country that gets all red in the face when the cable guy is a couple hours late. This guy will certainly shorten his life if he moves to a place where you are doing good if you get cable connected in a month, after spending 40 hours arguing with people, and bribing a few along the way. Stress is a killer, and if living overseas is stressful, then you're not doing yourself any favors by subjecting yourself to it. But if you can be in a situation where you are not made uncomfortable by the true locals talking in another language, not made uncomfortable by not fitting-in, not made uncomfortable trying to pick-up on local customs, then maybe all of that "work" fitting-in is simply "something to do" for you, and not stressful. One must look inward and admit it if the activities of being somewhere else is really "fun" or just different (and stressful).

 

[Alan]

If England is where you feel most relaxed, then you'll probably be better off there. That is, if leaving your kids behind doesn't cause any angst.

If one is "chill", one will probably be happier and live longer. That's not to say "bored", but as long as you've got something to get out of bed for each day (usually that's "your peeps" aka your close friends and family and your true interests), then living in a place that has less stress is probably better.

Your situation is quite different than some people that want to move for financial reasons, or think they'll "like it there". Hedonic adaptation means the warm days will fade into the background. There's a guy I know who is moving out of the country that gets all red in the face when the cable guy is a couple hours late. This guy will certainly shorten his life if he moves to a place where you are doing good if you get cable connected in a month, after spending 40 hours arguing with people, and bribing a few along the way. Stress is a killer, and if living overseas is stressful, then you're not doing yourself any favors by subjecting yourself to it. But if you can be in a situation where you are not made uncomfortable by the true locals talking in another language, not made uncomfortable by not fitting-in, not made uncomfortable trying to pick-up on local customs, then maybe all of that "work" fitting-in is simply "something to do" for you, and not stressful. One must look inward and admit it if the activities of being somewhere else is really "fun" or just different (and stressful).

Good summary.

In the USA our 2 children, now in their 30's, live well apart (Santa Monica and Houston), neither want or expect children, both have their lives and careers and this last 5 years have both enjoyed visiting and staying with us in the places we have stayed. This year our daughter and her Australian SO will be joining us on an Alaskan cruise and then later in the year at Yellowstone. Our son will be coming to join us for a couple of weeks in the Canadian Rockies. In the recent past they have come and stayed in places with us in Canada (Lake Huron one year, Quebec City another), Yorkshire, Cornwall, Ireland, France and Spain. We have shown them plenty of places when they were children and now in retirement we still enjoy entertaining them in faraway places. We usually look to renting a place with enough space for visitors, and many times we have had other friends and family come join us.

From a base in England we plan on doing a lot more European travel but still plan on wintering in Texas. We'll see how it goes, this new phase in our life. A good thing about having both US and EU citizenship is that it provides a big range of places to live.

 

[sengsational]

Yes, having the extensive experience, not to mention the flexible citizenships, you are some folks going into it with your eyes wide open. And I'm sure some folks that stumble into it also can turn out to have an intersting and have a "healthy stress" time of it. I think I would also like it, but my DW wouldn't have any of it. You probably can't be thankful enough if the both of you are on the same page with respect to how/where to manage this phase of your lives.

 

[Alan]

My wife and I have been soul mates since we first met at college in 1973, and we are very lucky indeed to have the same desire for travel.

 

[Sojourning]

Nuke_Diver, when you write, "my wife is not US born this is her country and the only one she's ever been a citizen", what does that mean? Was she not a citizen of the country in which she was born?

 

[DFA]

I just wondered why Ireland.

Here are some of the reason Ireland boiled to the top of the list.

1. We looked at Italy, but earthquakes, landslides, volcanoes, and flooding over the last couple of years changed our mind. Language is another issue.
2. We looked at Germany, gets very cold and hot with the four seasons in play, DW spent 6 months there and got to see a lot of it. I visited a lot of place in Germany for work. Language, although not bad b/c most speak English too.
3. We looked at France, I just did not like the place the times I had been there.
4. We looked at Spain, pretty nice places that I got to see, but language was an issue and a lot of tourists.
5. We looked at UK, four seasons again, and very high cost of living near the cities.
6. I lived in Okinawa for four years and visited Korea, Japan mainland, Philippines and I enjoyed myself, but did not feel the need to go back.
7. I traveled a lot of the central and south America for work, but the heat and humidity were just to much for me.
8. I have been to most of the islands in the Caribbean, but cost, heat, and humidity were issues for me. I don't scuba or fish all that much and that seems to be most of the activities there, and you can only read so many books and hang out on the beach.

So we decided Ireland:
1. We love the people like I said some of the friendliest we have met in our travels.
2. Weather is just right for me, not to hot not to cold.
3. Easy travel jumping off point for EU trips to see some of the things we missed on our previous visits.
4. Cost of living is not that much higher then we are used to and we have the budget to afford it.
5. There is a lot of history in Ireland and some of the DW ancestors come from there.
6. Felt pretty comfortable getting around shopping on the economy.
7. Driving is no problem for me.
8. Taxes work out for us because of the treaty.
9. International flights are available as needed.
10 Adventure, adventure, adventure.....

I have seen most of the US and there isn't as much history here, only a couple of hundred years for the most part.

Not a very tight knit family and if we need to come home flights are available.

Hope this answers the question of "why Ireland"

One question I have is do expats buy a car, lease one or long term rental?

 

[nun]

Here are some of the reason Ireland boiled to the top of the list.

On what basis can you retire in Ireland? I can see you getting an extended "leave to remain" with enough income and insurance, but that's not very permanent. Would you intend to stay a long time or just be a long term visitor?

 

[nun]

Yes, having the extensive experience, not to mention the flexible citizenships, you are some folks going into it with your eyes wide open. And I'm sure some folks that stumble into it also can turn out to have an intersting and have a "healthy stress" time of it. I think I would also like it, but my DW wouldn't have any of it. You probably can't be thankful enough if the both of you are on the same page with respect to how/where to manage this phase of your lives.

Having both US and EU citizenships give one the ability to move to lots of countries easily. However, that just removes residency and visa issues.

 

[Alan]

On the question of the cars I only have limited information for Ireland. The last 3 times we have spent a lot of time in the UK then we got around mostly by bus and train, renting cars only when needed.

In 2011 while living in England we didn't have a car and when we went to Ireland we traveled by train and plane, spending a week in Dublin, then took a train to Cork where we stayed for a week and as in Dublin got around from there for a week using buses before flying from Cork back to England.

In 2013 while staying in England with no car we had a month booked in very out of the way places in Ireland so we rented a car in England and drove there, car ferry over the water.

Next year in England we will either buy a car or do a 6 or 7 month lease. We haven't decided yet, but there are companies in the UK, including Enterprise, that cater for folks wanting long term car hire. An advantage of a long term hire is that insurance is included, if you buy a car then you have to find private car insurance in a country where you have no insurance history.

 

[Sojourning]

"One question I have is do expats buy a car, lease one or long term rental?"

Well that depends on several factors. How long they intend to stay being the most obvious. Buying will over the long term be cheaper but not necessarily if you only end up staying 1 year. Buying and then selling after a year means you will take a hit on depreciation, have had to pay for any maintenance, pay for insurance, etc. Renting long term might work out cheaper in that case.

I don't know about Ireland but in the UK, it is common to rent directly from a car dealership like Arnold Clark for example. Personal Contract Hire - Arnold Clark Note, the also hire used cars which obviously will be cheaper.

It does seem that renting as separate from leasing does exist in Ireland as well. I found this: Long Term Car Rental Ireland | Dan-Dooley

Don't forget, you do not have to change your license for that first year either, you can drive on your US license. It might make sense to rent for a year and then re-assess your plans.

I found your comments re Italy amusing DFA. "We looked at Italy, but earthquakes, landslides, volcanoes, and flooding over the last couple of years changed our mind. Language is another issue."

Other than volcanoes (and including language) you could be talking about California.

 

[Sojourning]

We were writing at the same time Alan.

For your 6-7 month visit to the UK you may want to look at renting rather than leasing as I have just written.

 

[Alan]

We were writing at the same time Alan.

For your 6-7 month visit to the UK you may want to look at renting rather than leasing as I have just written.

Thanks for posting the link to the car hire. As I say I haven't decided yet on a long term rental or car purchase. The difference this next time is that if we bought then the car would winter over in England, being looked after by my sister and BIL. While on travels this last 5 years our son looks after our car in the USA, using it every month for a few days to go to work.

If we were not setting up a permanent residence then I doubt we would consider buying a car and selling it before we return, but for the 12 month stay that DFA is considering then I would definitely think about buying and then selling at the end.

 

[DFA]

On what basis can you retire in Ireland? I can see you getting an extended "leave to remain" with enough income and insurance, but that's not very permanent. Would you intend to stay a long time or just be a long term visitor?

One can retire anywhere, but more to your point, if we decide to stay in Ireland long term we would fulfill the requirements for citizenship which I have read and the requirements are not very difficult to meet. The retirement plan has a separate spreadsheet for Ireland including a budget that meets our needs and the requirement to remain in Ireland and not become a burden to the state. If we decide not to stay the world is our buffet to try something else.

 

[DFA]

Other than volcanoes (and including language) you could be talking about California.

Been there many times for work too, would never consider living there for the same reason and more.

 

[Sojourning]

You can pay Road Tax and insure in the UK for 6 months Alan. You can then park it in a garage with no Road Tax paid and 'out of use' insurance. If your sister drives it then obviously you(or she) will have to pay the Road Tax and insurance.

Besides the depreciation if DFA bought for a year and then sold, the insurance for that first year with 'no driving history' in Ireland will probably be a signifigant number. There are also other factors that come into play.

Residence is one. DFA may be OK on that one since they plan to rent for a year but might find they have to be there a couple of months before they can get car insurance. Read some comments here (not all are correct obviously since they differ): Ireland Expat Forum ~ Car Insurance help needed PLEASE


Car insurance varies greatly in the UK (and perhaps similarly in Ireland) depending on your postal code and just where you park the car. If the postal code of where you register the car to is in what is considered a high risk area you will pay signifigantly more for insurance. The same applies if you park on the street, in a driveway or in a garage. In a garage might cost the most! 10 secret ways to slash the cost of your car cover | Moneywise
For your 6 months in the UK Alan you will also have a residence issue if you buy. You can give your Sister's address obviously and might get to buy insurance doing that. BUT, buying insurance does not mean you have coverage! For example, have a major accident with you at fault and someone seriously injured and the insurance company starts taking a serious look because there is a serious claim. Suddenly, they discover you are not in fact a 'residen't and therefore you are not covered. It does happen.

This is not a simple issue. Another factor is 'no claims bonus' and 'driving history'. Both the UK and Ireland have similar systems I believe. So first thing is to have a letter on letterhead from your current insurance company in the US, stating that you have '5 years with no claims'. A UK insurer may accept that letter from a US insurer or may not. Read here: 70% No claim discount for 5 or more claim free years

They say, "We will accept a renewal invitation, or a letter of proof from a previous UK, Channel Island or Isle of Man insurer." Their highlighting, not mine, which indicates to me that is ALL they will accept. Look at the discount - 70%! If you cannot get that discount, you can see how much higher your insurance cost will be, ie. $300 with discount or $1000 without the discount. When I bought a car in the UK, I had to pay the $1000 rather than the $300 (example numbers only) and build up that 5 year history.

I had the opposite problem when coming to Canada from the UK. I had a letter stating '5 years no claims'. The Canadian insurers refused that letter because in the UK, you can BUY continuing 5 years no claims bonuses by paying an additional premium. Canadian insurers know that and so insisted that I had to get a letter stating, '5 years no ACCIDENTS'. It took me several months, a dozen phone calls or so and several letters before I could get it sorted out.

What postal code you register the car to can result in higher insurance cost if it is considered a higher risk area. Parking on the street, in a driveway or in a garage can result in higher or lower costs. In some cases parking in a garage increases the cost!
10 secret ways to slash the cost of your car cover | Moneywise

I drove a classic car in the UK. It was cheaper to insure. So can a campervan be. My point is that understanding the insurance market in another country is not simple. Assuming it is similar to 'home' is never a good idea, just like assuming any other factor of living in another country is similar to home.

I did an edit and somehow some things here got mixed up. Sorry for that, I'm not going to try and correct it, the info is here but some in incorrect order.

 

[explanade]

Having a car limits the places you can stay, doesn't it?

Probably expensive to park in old city centers.

 

[Sojourning]

Umm, was that a serious question explanade? Having a car is no more limiting than not having a car. Try living in the countryside without a car.

 

[explanade]

Yeah it is a serious question.

It's one thing if you're living in a village or a small town (although a lot of smaller towns in Italy and elsewhere either limits or prohibits car traffic in the center except to residents with permits) and have detached homes with plenty of space to park.

Try to park in the center of London or Paris. Or even smaller cities like Florence or Nice.

 

[Sojourning]

How is that more limiting than not having a car? If we agreed a car limits you in a city and a not having car limits you outside of a city, do you not see that as equal? Everything limits something one way or another.

Another though on cars for you Alan and DFA. I've owned several classic cars in my life. One reason is resale value. If you buy a new or near new car, it depreciates. If you buy the right classic car it appreciates. I've never lost money on one yet.

Here's the 'trick' though. NEVER restore one. You will never get back out the money you put into it. Always buy one that has been fully restored by someone else. The 1980 TR7 I had in the UK was originally from Texas (no rust). A guy in the Lake District of England who was an engineer, had it shipped over and then did a complete body off restoration. Besides everything else, he replaced every single piece of rubber on the car. When you closed the doors they 'clunked' like a new car, not 'clanged' like loose doors on an old car if you know what I mean. When I bought it, you could have eaten dinner of the underside (as the saying goes). I drove it for 6 years without any repairs. Only costs, a new battery and normal service.

What's more, as it was left hand drive being from Texas and he didn't convert it to right hand drive, that meant the price in the UK was lower as it was less desireable for UK drivers. But no problem for me. It also meant it was better for taking to Europe by ferrry and driving in mainland Europe.

I'm comfortable driving on either side of the road and refer to it as being ambiroadius (as in ambidextrious). The only problem was when passing in the UK. Since you are driving from the left side of the car and on the left side of the road, you cannot see around the vehicle in front of you to pass.