Ask Terry Questions Moving Abroad in Retirement

Moving Abroad in Retirement

By Terry Savage on November 28, 2018 | Wild Card

I’m 56, and took early retirement from my company after 27 years. I chose a 100% survivor benefit option that gives my wife (age 50) and I approx 5800/mo for life. I also have a company 401k valued at 765,000. My plan is to continue working another 10 years to generate a second income while receiving my fixed pension as stated.
We have one child aged 16.
We come from different country back grounds and have plans to possibly relocate abroad, be it Canada or France. May we leave our current 401k as is in the USA and eventually draw when we need later, despite not living in USA?
My company pension will pay continuously for life into our USA bank.
I’ve paid my full FICA taxes owed to my pension soon after I resigned and believe that one time expensive payment will ensure my SS benefits when age reached.
Without meddling with foreign banks and investment firms, can we simply leave everything we have intact here in USA and control it remotely.
We are all USA citizens as well as Canada and EU so taxes must be declared wherever we may be outside USA.
Just wondering how to best manage our situation and retirement assets if we choose to move out of USA.
Thanks.

Terry Says

This is a more complicated question than just the issue of managing your money.  But with an estimated 9 million Americans retired abroad, there are certainly plenty of answers.  You need to do a lot of financial planning before making this move.

Start by reading this excellent article prepared by Merrill Lynch’s wealth management department.

Basically, it’s easy to manage your money from abroad.  You can leave your money in your 40l(k) plan and IRA account in the U.S.  And you can have your SS deposited directly into your US bank account — then transfer needed living expenses to your destination country.

But depending on your destination country, you could find yourself filing taxes in both countries.  And if you move money to a second country,  even just enough for daily living expenses, you will be required to file the FATCA  forms with your US tax filings.   You’ll need a tax accountant or CPA with experience in these issues.

And you should be prepared for the impact of currency fluctuations.  If the world decides the dollar should not be valued so highly, you will need to exchange more dollars to cover your living expenses abroad.  (Right now the dollar is “strong” – -making foreign living appear cheap.)

If you’re thinking of giving up your US citizenship, be prepared for a one-time tax on ALL your assets, as well!  Yes, it gets complicated so be sure to seek good tax and legal advice on your situation.

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