CLIENT
Over
There!
Living abroad seems like an inexpensive
option for some prospective retirees, but
there are many issues to consider.
By Katie Kuehner-Hebert
Agrowing number of Ameri- cans claim to be thinking about retiring to a foreign country to stretch their
savings, but financial planners who
specialize in this field say it’s not as
easy as it looks. Americans thinking of
becoming expatriates should first consider a host of potential issues.
While the exact number of Americans retiring abroad is difficult to
ascertain, roughly 350,000 retirees
who now receive Social Security benefits live in foreign countries, according to the Social Security Administration. That number is expected
to grow, especially with Americans
living longer and worrying about
depleting their savings. According
to Travel Market Report, an industry
news service, up to 3. 3 million baby
boomers are considering retirement
in a foreign country.
“People typically retire based on
their birthday instead of their bank
account,” says Joseph Hearn, vice
president at Teckmeyer Financial Services in Omaha, Neb., and author of
If Something Happens to Me: A Workbook to Help Organize Your Financial
and Legal Affairs as well as The Bell
Lap: The Eight Biggest Mistakes to Avoid
as You Approach Retirement.
“They’ve reached 65 and it’s time
to retire, but they don’t have the
money set aside to actually do that.”
For such people, retirement abroad
can seem attractive. “The good thing
about retiring overseas is that many
places have a lower cost of living, so
their U.S. dollars go further and that’s
one way to make up for lost ground,”
Hearn says. “They will still be able
to live an enriching, fulfilling, enter-
taining retirement without having to
be independently wealthy to make
that happen.”
But deciding to live in Costa Rica
or Italy is not as simple as leaving New
York for Nevada or North Carolina.
There are many consequences that
should be considered.
TAX ISSUES
Hearn advises his clients considering
an international move to first consult
with a tax lawyer, particularly one who
is familiar with the countries they are
considering. Generally, any tax that a
person is obligated to pay while resid-
ing in the United States is still a man-
dated tax if he or she lives in a foreign
country, he says. But if a person works
abroad, the IRS allows an exclusion of
up to $95, 100 in earnings from a for-
eign country.
Financial-Planning.com
November 2012 Financial Planning 95
