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How to plan for dream of retiring abroad?

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  • How to plan for dream of retiring abroad?

    Hi everyone -- I searched the forums and didn't find much on this topic.

    My spouse is European. He is a permanent resident for now. We would like to have the option to move to his country eventually, even if only part time.

    I started to open his Roth IRA today (as a resident we've only been contributing to mine and we are finally at a point where we'll be able to go over 5500/year) when I realized that perhaps the tax benefits down the line would actually not be so great if we withdraw abroad. A quick Google search brought up other expats frustrated with not being able to find definitive answers for his country but it sounds like withdrawals from any retirement account are taxed highly as pension income.

    I wonder if this changes the calculus for saving for retirement. I'd hate to contribute to a Traditional IRA if that means missing the boat on Roth. OTOH now is the time for Roth!

    If we are not sure what we'll do in retirement, I'm thinking we should just save save save and with enough money in the bank eventually it won't matter so much whether we pay taxes abroad or not, especially considering that things like healthcare and college for future kids would be essentially free. What do you think? Does anyone else here have potential plans to leave the USA? Has it changed your savings plans/strategies?

  • #2
    Hard to know this far ahead what the rules and reg's will be by the time you retire and move or even move part-time or how your plans might change. There are options, though, if you retain your citizenship. For example, if you're at least age 59-1/2, you could simply distribute the full Roth while you're still a citizen/resident of the USA and invest it in a taxable account. It will be important to know the treaty between the US and the country you move to.

    So, I'd recommend the Roth for you, but I don't know enough about your situation to have an opinion on whether your husband should consider one.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      Not speaking to the mechanics of saving and investing, but I have given a lot of consideration to spending a part of the post-work years living abroad. There are websites, blogs, and services devoted to it. For me, it is more of a pipe dream, than a likely outcome, and if it were to happen, it would be later in life than what you plan.

      One thing that makes it attractive is the lower cost and relatively higher quality of living in many places around the world. In that respect, if you pull it off, you probably need less money to live on so less money to save, depending on where you plan to live. If it is Toronto, Paris, or London, then you will probably have to save more.

      Like anticipating saving for any goal, if you can determine how much you will need, work backward and make a plan to save for it.

      Back to your question, as a resident, it is likely that the Roth is your best bet.