One of the very-long-term goals for our family, one that probably won’t be realized until the kids are sent off to college, is to live overseas for an extended period of time.
Our family connections, careers, and school systems are among the things that keep us here for now. Over time, all of those factors will change, and we have a deep desire to experience the world as much realistically possible through the eyes of a “local.”
Perhaps the amusing thing is that, since both my wife and I were born in other countries, we are technically already “overseas.” But for all intents and purposes, the United States has been our permanent home for more than 20 years.
One of the questions we’ll inevitably face if we make the move is how to handle our finances. We are fairly skilled at navigating the systems, accounts, tax laws, and customs in the States, but have almost no experience doing any of that in another country. What would we need to move and change and what could remain here?
Let’s look at a few of the basic questions:
At the point in our lives when we expect to travel extensively, working shouldn’t be much of an issue, with “retirement” income to some degree, and with other forms of passive or online income in full swing. (I say retirement, because we’ll only be in our late 40’s).
At the same time, the option of setting up a small architectural studio in Rome, or even cutting cheese at the Parisian deli are not out of the question, if that strikes our fancy.
In order to obtain work or start businesses, we’ll obviously need government permission in the form of a visa or other document. On the financial side, we’ll need a way to get paid and a place to put that money once we’ve earned it. And whether our income comes in the form of a job or passive income back in the states, we’ll need to worry about…
Many foreign countries have reached tax agreements with the United States that govern how your income here and overseas is treated for the purposes of taxation. As always, it helps to have a professional review your personal situation. If we’re leaving the U.S., we’ll still have to file our taxes annually with Uncle Sam and claim all income, regardless of the country of origin.
The tax agreements between states often provide for some kind of waiver or preferential treatment for paying your taxes. They might stipulate, for example, that if you pay U.S. taxes on certain income, that income is then exempt from taxes in the other country, or vice versa. Income limits can sometimes apply to these kinds of deals.
Banking in the U.S. is typically a simple matter of selecting a national or local bank, or a credit union where you can qualify for membership. However, many of these banks are not readily accessible overseas.
For ease of access, one possibility is to use an international bank, or to find a local bank in each location where we plan to live.
If moving all of our money sounds too cumbersome or scary, another option is to use a U.S. bank as the “home base” and to use overseas banks as local accounts, holding only what we would need in the short-term, and opening and closing them as we go. We would need to check with our local banks to see if accounts can remain open, and with the banks overseas to determine if we would be approved for a new account.
If we hold considerable investments at the time of our move, it will be important to take a look at the residency and tax rules of those investments and how our travel choices will affect them.
Another important factor will be health insurance–where and how to get it, and how to make it affordable and effective. The cost of health care is expensive both here and across the world, particularly for travelers who don’t have citizenship and health care rights in other countries.
All in all, Americans who decide to move overseas for any extended amount of time face a series of financial challenges, but it’s usually things that can be overcome. Diligent research and consulting qualified professionals are two great places to start.