There is a growing trend in Bermuda for pre- and post-retirees to consider moving to another country for the last chapter of their lives instead of spending their retirement years on the island. The chief reasons are usually the possibility of a lower cost of living, and/or a more adventurous lifestyle.
Whether you’re choosing to move to the U.S., Canada, or perhaps to the United Kingdom, you must make sure that you have an ironclad plan in place. Retiring overseas can be a great idea, but without research and a clear understanding of what’s involved, it can be a very bad idea and one that could cause financial ruin.
Here are four questions you should be comfortable answering prior to making the move:
1.Do you plan to rent or buy—have you spent enough time there and lived like local?
2.How will you get access to your money, and more importantly, how will you collect your pension?
3.Is medical care available to you?
4.How hard is it to establish residency, and are there any tax implications?
Rent or buy—have you spent enough time there and lived like a local?
Deciding whether to rent or buy can be daunting, especially when you’re trying to narrow down exactly where and what is important to your retirement lifestyle. If you’ve made the decision that you’d like to retire overseas and have pinpointed the country and area that you’d like to live in, have you spent significant time there and lived like a local?
The “blinders” of vacation eyes can definitely paint a very different picture than the reality of living there full-time—trust me, it’s not unusual to get wrapped up in the splendor of this new and exciting chapter! Spending several months in the area will give you a basic idea of the place, and can aid in determining if it has the infrastructure needed to support the type of retirement you’re looking for.
How will you get access to your money?
Simple enough question, but depending on your selected ideal retirement place, it may not be as simple an answer. Are you planning on opening an account in your retirement country, and what are the requirements to do so? Is your plan to keep your accounts here in Bermuda and simply use your debit card to withdraw cash? Either way is fine, but make sure you understand the costs associated with both before making any decisions.
Is medical care available to you?
Health insurance is no doubt one of the largest expenses during retirement and making sure you have good quality healthcare is extremely important. Does the country you intend to move to have healthcare? A lot of people are looking to move to countries that offer free or relatively inexpensive healthcare to its residents, but this comes with a price. Are you prepared to wait 6 weeks for a doctor’s appointment, for example, and are you also prepared to no longer have the choice of treatment and to be told whether it is elective or non-elective?
How hard is it to establish residency and are there any tax implications?
Some countries are delighted to welcome foreign retirees and may even offer incentives including residency and exemptions on duty charged for personal affects that you bring with you. But don’t set your sights on countries that already have an aging population; they do not want foreign retirees and will make it very difficult for you to qualify to obtain a visa.
Additionally, when you move to your new country, will you fall into their tax system? Will those retirement dollars you worked so hard to put away suddenly be deemed as taxable income in your new place of residency? Although in Bermuda we enjoy the privilege of not paying tax on retirement income, that is not often the case in other countries. Therefore, it’s important to know what those potential tax liabilities will be and exactly how you file those taxes.
For more information regarding retirement planning, please contact us—the experts in retirement—directly!