Recently I wrote a post called "Investigate Exchange Rates Before Moving Overseas." However, the currency exchange rates are not the only issues that could affect your pocketbook if you decide to move to another country. While most potential problems can be avoided or dealt with, it is important that you take the necessary steps to be assured that everything goes as smoothly as possible.
Factors To Consider Before Moving to Another Country
* Have a realistic idea of the cost of living - While it might be possible to live very cheaply in another country, will you be living in a lifestyle that is comfortable for you? One young couple we know who moved to Costa Rica recently spent $300,000 for a new, modern home in a gated community. While they could live cheaper in other areas, they preferred the safety and modern amenities that were available in this neighborhood. You need to ask yourself ... will I really be reducing my cost of living? In addition, you need to factor in extra expenses, such as the cost of travel back and forth to visit family in the United States.
* Make arrangements to receive your Social Security checks in your new country - Approximately 400,000 U.S. retirees currently get their checks abroad. You can find out how to do this and whether or not the checks can be sent to your new country at SSA.gov/foreign. Once in your new country, the U.S. embassy or consulate can assist you if you have any problems.
* Investigate the health care system and medical insurance in your new country - Will you have access to the specialists you need at a price you can afford? Since you cannot use Medicare in other countries, can you buy into the national healthcare system in your new country or purchase private insurance? Should you keep basic Medicare available for when you travel back to the U.S.? Many people do, especially if they make frequent return trips or only live overseas for a portion of the year.
Another option is to selection a Medicare Advantage plan that will provide at least emergency coverage in foreign countries. It is reassuring to know that part of your medical bills will be covered if you have a stroke or heart attack in your new country.
* You are required to continue to file U.S. tax returns - If you have any assets in the U.S., or at least $10,000 in a foreign account, or any income coming from the U.S., or you are earning foreign income, you are required to file tax returns, even if you don't owe any taxes. Failure to file the proper forms can result in a $10,000 fine and you can be arrested upon your return for felony tax evasion. Make sure you cut all ties with the state where you have lived, too, or you could be expected to file state tax returns. You may also have to file a tax return in your new country. You need to check with an accountant in the country where you will be living to learn exactly what tax laws could affect you.
* If you plan to work in your new country, make sure you know the requirements - Will you be allowed to work? Remember, you will also have to report any money you earn to the U.S. government as well as to the government of the country where you now live.
* Set up a bank account in your new country - However, you may want to keep most of your assets in a U.S. bank where they will be less affected by currency fluctuations.
* Consult an attorney before buying property in a foreign country - Some countries allow you to purchase property, while others do not. In addition, a local attorney could help you avoid a real estate scam or other problems.
* Have a local attorney look over your will, trust, power of attorney, etc. - Make sure your wishes will be honored in your new country and that your documents comply with their laws.
* Register with the U.S. State Department's Smart Traveler Enrollment Program - This is important so the government can find you in an emergency.
In addition, some people I know who have owned homes overseas have told me that they enjoyed it most when they only spent part of the year there or only stayed for a few years. In this way, they were able to still spend time with family and loved ones in the United States and not feel so isolated.
In the end, the choice of whether to retire overseas or stay in the U.S. is up to each individual. Whatever you decide, just make sure you have prepared carefully for everything you can and realize that some problems ... such as erupting volcanoes, hurricanes, earthquakes, floods, debilitating illnesses and other emergencies ... are things you will just have to deal with as they come. After all, that's part of the adventure, isn't it?
If you are planning your retirement, you will also want to check out the tabs at the top of this article for links to hundreds of posts on a wide variety of retirement topics.
Sources and Reference Materials to Help You:
"Tax Guide for U.S. Citizens and Resident Aliens Abroad" at IRS.gov/pub/irs-pdf/p54.pdf
"Before Relocating Abroad, Consider These 10 Guidelines" Where To Retire Magazine, September/October 2014.
You are reading from the blog: http://www.baby-boomer-retirement.com
Photo credit: www.morguefile.com