How to Help Your Client Live Financially and Legally Overseas

Plenty of Americans are retiring overseas as the price of a U.S. retirement soars higher and higher, while prices in international bourses go lower.

Reasons go beyond financial for many ex-pats, some of whom are returning to their heritage, or moving to be near family. Whatever the reasons, financial advisors can help those who want to move overseas stretch their nest eggs to make it happen.

“There are some common benefits and drawbacks when retiring overseas,” said Sharon Vagley, co-founder of Good Migrations in Santa Monica, Calif., a site dedicated to helping ex-pats relocate internationally. “We’ve spent the last several years helping expats relocate for education, work and retirement.”

While there are no hard numbers on how many Americans go the ex-pat route, the favorite overseas landing spots are known.

A recent LinkedIn study showed that London is the most popular city for U.S. ex-pats to retire – and to work. London is followed by Sydney, Toronto, Paris, and Shanghai.

We can also pinpoint, to some degree, from where ex-pats are leaving to head overseas. The same study noted that residents of Washington, D.C., New York City, and Austin, Texas lead the list of large cities that send Americans overseas.

Statistics show that some Americans take a trip to a favorite country and wind up living there. Dallas blogger Helene Sula moved from Dallas, Texas to Heidelberg, Germany last year.

“I didn't move abroad with a formal job and my husband quit his job,” said Sula, creator of the Helene In Between blog. “We basically moved overseas to travel and because cost of living in Germany is extremely wonderful, despite the fact that we had never stepped foot in the country before our arrival.”

Critical Questions

No matter where ex-pat-minded Americans like Sula come from, or are going, there are several key “rules of the road” to follow before leaving the U.S., expert say.

“Having now lived here a year, I’m able to see the benefits and drawbacks of living in Germany or retiring abroad,” Sula said.

If your client wants to become an ex-pat, you’ve got to ask – and answer – four critical questions:

• What's the road map for ex-pat success?
• What are the benefits and drawbacks of retiring overseas?
• What steps do you need to take before you retire and move away?
• What mistakes should you avoid and why?

Vagley councils patience on uprooting and retiring abroad, and advises financial planners and advisors to tell clients the same thing.

“You’ve got to really do your research on where, exactly, to retire,” she said. “Make sure you visit the country you’re considering and test it out first. Also, start researching visa requirements and how to obtain residency and research local healthcare and local taxes.”

Vagley’s drawbacks to retiring abroad:
• Being away from friends and family
• Dealing with foreign bureaucracy
• In many cases, you still have to pay taxes if you are a U.S. citizen living abroad

Vagley’s benefits to retiring abroad:
• A lower cost of living
• A better quality of life
• Healthcare is less expensive overseas
• New adventures and exploration

Keep Assets in U.S.

Financial advisors who have clients who have retired outside of the U.S. say that keeping a close eye on finances and investments is imperative.

“Keep a good deal of your assets in the U.S. or if you decide to diversify internationally through different countries and asset classes,” said Edgard Baqueiro, a Mexico-based insurance agent who has “many” U.S. retirees as clients south of the border.

“Never (convert) all your nest egg to the country you are planning to live in,” he added. “More often than not, economies in cheaper countries are highly unstable if you compare them to that of the U.S.”

Real estate transactions abroad are another key area of concern for ex-pats.

“Bear in mind that contracts enforcement in places like Mexico is a lot weaker than in the U.S.,” Baqueiro said. “Consequently, take twice as much caution … when buying real state and undertaking any other kind of agreement.”

Getting good professional services help should be a priority, as well.

“In any country around the globe there are people that specialize in helping ex-pats get established in their new country,” Baqueiro said.

While a different country is often a cheaper option to the U.S., but laws and cultural practices may be very different than those back home.

It’s important to invest some time and money to choose a group of advisers like a lawyer, an accountant, an agent insurance and a realtor, Baqueiro said. They should know the ropes in the country you’re targeting.

“That may be of great help for your financial health and peace of mind,” he added.

In general, the ex-pats who do make the move to a different country are invariably glad they did, experts say.

“Taking everything into account, retiring abroad may be an excellent decision,” Baqueiro said. “Speaking about Mexico, the weather is great and Americans are regarded with admiration by the general population.”

Brian O'Connell is a former Wall Street bond trader, and author of the best-selling books, The 401k Millionaire and CNBC's Guide to Creating Wealth. He's a regular contributor to major media business platforms. Brian may be contacted at [email protected].

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