Financial Implications of Living Overseas: 4 Things to Know About Saving for Retirement

Living overseas can be an enriching experience, but it’s important to consider the financial implications, especially when it comes to saving for retirement. Here are four things you might not know about living abroad and saving for retirement:

1. Different Financial Accounts: Many American banks and brokerages don’t allow non-U.S. residents to keep accounts, including retirement accounts. Be sure to research your financial institution’s policies on living in a foreign country.

2. Limited IRA Contributions: The Foreign Earned Income Exclusion (FEIE) limits the amount of foreign income a U.S. expat can earn without paying federal taxes. Be aware of this limit when contributing to an IRA to avoid penalties.

3. Required Foreign Bank Account Reporting (FBAR): If the total value of your foreign accounts exceeds $10,000 at any time during the year, you must file an FBAR with the Financial Crimes Enforcement Network (FinCEN) to avoid penalties.

4. Consider Changing Retirement Plans: While Americans living abroad can keep their U.S. retirement plans, it may be beneficial to contribute to a local retirement plan in your new country to take advantage of tax benefits.

Before making the decision to relocate overseas, be sure to research all the financial implications to ensure a secure retirement.