Thinking about an exotic paradise for your retirement? Retiring in a foreign country can be fun, exciting and the perfect way to spend your golden years. But before you start packing your bags, there are a few things you should consider.
Are you sure you like it there?
Vacations are always fun. You’re away from the hustle and bustle of real life, and you get to escape for a couple of weeks. But living in a place and vacationing there are two very different things. You need to be certain that the island paradise you have in your crosshairs won’t become dull and boring when you move there.
You may want to consider trying before you buy. Think about spending three to six months in the place you want to move to. This should give you plenty of time to understand the local communities. It will also let you experience the day-to-day lifestyle in a foreign country.
After this time you may find yourself homesick or missing friends and family. You may find that extended vacations are a better strategy than living there full time.
How does living abroad affect your taxes?
Just because you’ve left the U.S. doesn’t mean the IRS hasn’t come with you. If you keep your citizenship, you are still required to file a United States income tax return. You also are taxed on any worldwide income. What’s more, because you’ll be a resident of two countries, you may have to file, and possibly pay, in both.
That doesn’t always mean you’ll have to pay double. The good news is that you may be given credit on your U.S. taxes for any tax you pay in your new country of residence. However, you should still make sure you can afford to pay two sets of income tax.
How will you cover health care?
Because Medicare doesn’t cover health service in foreign countries, you should spend some time researching the health care options in your new country. Some countries may have cheaper public and private options than the United States. Other countries even let foreigners with resident visas buy into their national plans. Overall, you should investigate your new country’s health care system so you can make the best choices for your retirement.
Ready to learn more about retirement planning? Contact us at Carstens Financial Group. We can help you evaluate your objectives and needs, and then develop a strategy. Let’s connect soon and start the conversation.
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