Hidden Costs of Retiring Overseas
Tip It!I’ve written in the past about the possibility of retiring overseas. While this can be a great way of stretching your retirement dollars, I recently ran across a blurb in Bottom Line/Personal that talked about some of the hidden costs of retiring outside of the United States.
For example, even if you move overseas, you’ll still have to pay income taxes on Social Security benefits as well as distributions from your pension, 401(k), traditional IRA, etc. You’ll even have to pay tax on income earned while abroad, though there are certain treaty provisions as well as the foreign earned-income exclusion that can reduce you liability. In addition, Medicare does not cover treatment outside of the United States. Thus, while many countries provide nationalized health care, you’ll need to check out how they handle foreign residents — you may or may not be covered.
Published on February 21st, 2008 - 9 Comments
Filed under: Retirement
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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February 21st, 2008 at 8:22 am
America is an ASS about working or retiring overseas regarding its taxes and the only country to be such an ass about it too.
February 21st, 2008 at 8:48 am
Huh?
February 21st, 2008 at 10:24 am
Were my wife to work in australia, she would have to pay tax on that in australia, then pay tax again on what she earnt in australia in america!
and retiring OS, as you noted, is again all about being taxed.
The best thing to do for either retiring or working OS is to revoke your citizenship and become a citizen of wherever you want to go (if you can ofcourse).
America is the only country that does this double taxing and it makes things hard on the paycheck :/
February 21st, 2008 at 12:12 pm
You can always renounce your citizenship when you’re ready to retire, assuming you don’t need Social Security benefits. As a 24 year old, I expect to see approximately $0 from social security anyway.
Unfortunately my family has been in the US for 3 generations, and the only other citizenship I’m eligible for is Israeli- but for 1st or 2nd generation immigrants it’s a lot easier to gain citizenship in your mother country!
February 21st, 2008 at 4:54 pm
I’ve found very little use for my dual citizenship (Canada) but this sounds like something I should look into…I wonder how the Canadian government handles things.
And PS for serious healthcare the best place to be is the US. Canadian doctors overwhelmingly come to the US for THEIR healthcare for a good reason.
February 21st, 2008 at 5:20 pm
I think that the first $40,000 of your income from a different country is subject to the earned income credit tax limitations.
But even if you had to pay for healthcare ( provided that you are not very sick, but just plain old ), you might be better off living in a foreign country, where the standard of living is lower.
February 25th, 2008 at 5:45 pm
I have a lot of co-workers that have retired overseas and loved it. They did say that it’s not as easy as you might think though. There a lot of considerations that many people don’t think about before they take the big leap.
October 30th, 2008 at 5:09 pm
hi i need an answer to iget checks from germany not much $150 a month once i cash the check i have no proof for the goverment please give me an answer what to do thanks
March 22nd, 2011 at 5:27 pm
Vanguard Mutual Funds freezes operations, except for selling, for Americans living in Canada. Pretty raw deal rewarding clients who for many years entrusted Vanguard, supposedly a shareholder-owned company, with their retirement plans!