Which Shore is Best? Deciding Between Domestic and Foreign Relocation
Understanding what your client wants out of their retirement relocation is critical, and helping them determine whether they want to go abroad or stay within their home country is an important first step. Whether your client envisions warm sandy beaches, mountain views, or experiencing a new culture, many of these adventures can be found either by relocating to another part of the globe or by moving to a new corner of the country. Yet, the legal process, moving logistics and lifestyle outcomes can be quite different. Here are some financial considerations to raise with your clients to determine if an across-the seas move is what makes the most sense for them:
Standard Cost of Living
How will moving to their desired location affect their daily expenses? Common purchases including groceries, utilities and transportation vary greatly within different countries and especially among different states. If they have yet to research the cost of living in their city of choice, you can help your client begin their search by looking up an online cost of living calculator. In many countries, a reduced cost of living allows older individuals to retire early. But remember that although general expenses appear to be less, there are several other factors that will determine the actual cost of retiring in a foreign locale.
Healthcare benefits, including Medicare, are available to U.S. citizens whether they live abroad as expats or reside domestically. But just because your client has Medicare coverage does not mean they will be able to effectively use it while living internationally. According to the Center for Medicaid and Medicare Services, there are very few instances where Medicare will cover treatments (even emergency care) received outside of the United States. The good news is that there are many international plans available that make retiring abroad possible for many. Advise your clients to look into the cost and quality of healthcare in countries that interest them.
The IRS expects United States citizens and residents to file tax forms whether or not they live domestically. Expatriate Americans are usually expected to file in their new country of residence in addition to filing with the US. This may seem daunting and expensive to clients who want to relocate overseas, but expats can qualify for tax benefits. The foreign earned income exclusion and foreign tax credit are available to expats that file in the United States, but other countries vary in how they tax foreign residents. Ask your clients if they have talked with their financial and tax advisors and understand the tax implications of moving abroad.
Part of finding the perfect destination for your client is determining if they will be able to obtain the right visa. Many countries make relocating to their shores easier for retirees, but each nation has their own unique requirements for residency. These conditions consider factors such as net worth, income, and age. Some countries, including Greece and Ireland, will give long-term residency to foreigners who invest in the country’s economy. These “golden visas” are often awarded to those who invest a certain amount of money in local real estate or businesses.
When working with clients who plan to move to a new country, financing options are likely to be limited. If your client hopes to acquire a mortgage, look into areas that offer financing options for foreigners—and prepare them for terms that are far less-ideal than what they would find domestically. Although the debt ratios to qualify are usually similar, they can expect higher interest rates, larger down payments, and shorter loan lengths.
Assessing your clients hobbies, interests, and comfort level with new experiences can help you guide them towards a new destination. Some retirees are ready to jump into a new culture —adopting its language, food, customs, and people as their own. Others want to experience a new country while maintaining a semblance of home. Cities including Bordeaux, France, Tlaxcala, Mexico, and Boquete, Panama with higher populations of senior expats are good options for relocaters who desire a strong social network of other retirees. Retirement hubs around the world often have community members gathering for book clubs, cooking classes, language lessons and more. Many of your clients aged 60+ looking to move, should also consider ease of travel to and from friends and family
Whether you are thinking about making a move locally to a 55+ community or looking to relocate, call me. I am a senior real estate specialist who is Happy to help guide you in making the right decisions for you. Reach out to me 267-397-6291 or TheSwainTeam@gmail.com for a free copy of my book – “Downsizing & Preparing to Sell”