Ask Your Newport Beach Estate Planning Attorney About the Financial Ramifications of Retiring Overseas

10:43 pm Retirement Planning

retirement plan e1326494532376 Ask Your Newport Beach Estate Planning Attorney About the Financial Ramifications of Retiring OverseasRetiring overseas has become increasingly popular as Americans try to stretch their retirement dollars as far as possible while still enjoying an active lifestyle.  In fact, according to CNBC, over a half million American retirees are currently enjoying the expatriate lifestyle in countries all over the world.

However, before you decide on an expat existence, you should discuss your plans with a Newport Beach estate planning attorney so you understand all the financial implications of your decision, including:

Taxes – the IRS allows Americans living overseas to exclude up to $91,500 of income earned abroad by using the Foreign Earned Income Exclusion (FEIE).  However, to qualify, you must have lived outside the U.S. for no less than 330 days in a 12-month period.  If you do not qualify for FEIE, you will still need to file and pay U.S. income taxes.

IRA Contributions – generally, once you move out of the country, you will not be allowed to contribute to an IRA since to do so, you must be earning taxable income.  If you apply for and claim a FIFE, you would not have taxable income so would be precluded from making contributions to an IRA or, in fact, most retirement accounts.

Social Security Benefits – living overseas will not stop you from receiving your Social Security benefits, but depending on what country you choose, it could be a hassle.  The government cannot send funds to some countries; in others, it may take up to four weeks for your check to clear.  Most expats get around this by keeping a U.S. bank account and accessing their funds via an ATM card.

If you want to learn more about planning well to live well in retirement, contact our California estate planning law firm.

Contact us today and let our Newport Beach law firm help you with all your financial planning needs.

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