Considering living abroad? You may find a lower cost of living and the chance to stretch your retirement dollars, but it takes some financial planning.
Creating a plan before you get there can make the move easier and allow you to return to the U.S., whether permanently or on a temporary basis. Here are some financial steps to take before you go:
Hopefully you’re not packing for a flight tomorrow and started saving money for living abroad a year or so before making the move. Having six to nine months’ worth of living expenses in the bank, along with money for moving costs, is a good goal.
Fund a low-risk savings vehicle to pay for the costs of moving abroad and back, flights to visit family and friends, housing, security deposits and emergency health care, among other moving costs. Even if you have a job waiting for you overseas, having a healthy savings account can make the move a lot easier.
You may already know that housing is cheap, but what about the costs of food, entertainment, transportation, utilities, education and insurance? Taxes will also eat into a budget, so have an idea of how much you’ll have to pay. Look online for a cost-of-living overseas calculator and read expat blogs for sample budgets.
Your bank in the U.S. may have a partner bank overseas, or you may be able to bank online. Chances are , however, that it will be easier to bank in the country you’re moving to, at a bank with nationwide access in your new country.
If you have credit cards with Visa or MasterCard, check if they participate in a shared ATM or payment clearance network like Cirrus. This can be a sign that they’ve been vetted by major businesses and are reliable. Check if bank deposits are guaranteed, meaning the host country’s government guarantees the accounts. Consider the stability of the government.
Make sure the banks allow U.S. citizens to open bank accounts in your new country. They may not be able to because they don’t comply with the Foreign Account Tax Compliance Act, which requires them to tell the IRS of accounts held by expats.
If you do decide to set up a bank account in your host country, do it before you leave the U.S. At least start the application process early and be sure you have all of the documents you need before you get there. Without a local account it can be hard to find housing or get a cellphone or credit card.