US retirees advised to sort out financial pros and cons before emigrating

US retirees are being urged to consider the financial pros and cons before making the decision to emigrate.

Seduced by travel and expat-aimed websites with alluring headlines about retiring to paradise on a shoestring, many US retirees leave their home country without educating themselves about essential financial matters. In the real world, understanding all transition issues and making a sensible financial plan are both essential in ensuring a successful retirement.

The first and, for many, the most important issue concerns US citizens’ tax liabilities once they’re living abroad. Americans are just about the only expats who are forced to continue with tax obligations to the US government once they’ve left the country. It’s totally unfair, but it’s a fact. Tax returns must be filed annually and, in most cases, tax will need to be paid on worldwide income, although credits are given to tax paid overseas.

Another issue for retirees with families is that of a will, as inheritance laws in the rest of the world may well be very different than those in the USA. For example, property laws in France stipulate that children must be included as heirs, even if a will states everything must go to the deceased’s spouse. Having a revocable trust detailing your wishes may not be the answer, as other countries’ laws can easily overrule a trust based on American law. Having two wills, one of which conforms to the laws of the new country of residence, is one way to ensure your death doesn’t cause a family war.

If possible, it’s best for US expats to keep their investments and bank deposits in the USA. Withdrawing funds overseas via an ATM is straightforward in most world countries, and laws relating to FATCA have made it difficult for US expats to open foreign bank accounts. For US retirees in receipt of Social Security payments, it’s generally allowable to still receive benefits overseas, but checking with the Social Security Administration’s website is a good idea.