How to Become Comfortable with Traveling Even When You Have Disabilities

 

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Choosing the Best Place to Live in Retirement: What You Need to Know

 

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What Baby Boomers Want For Their Retirement Homes

 

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Retiree United States Expat Tax Guide

By Ines Zemelman, EA. , Founder of taxesforexpats.com

Thanks to easy transportation and new technologies, the world continues to get smaller. This means many Americans are picking foreign locations for retirement rather than simply moving to the historically typical Florida or Arizona. Lower costs, nice weather, and even acceptable medical care make more exotic places appealing.

As one might expect, though, simply moving abroad after retirement does not exempt United States citizens from tax reporting obligations. Be sure to include tax considerations in your decision making process alongside learning the local language!

United States citizens are required to report all of their income – including pensions, other retirement plans, real estate, and other foreign or domestic investments – regardless of where it was earned or where they are living.

Using This Guide

This guide is intended for those who are already retired, or who are planning their retirement. It is important to include these considerations in decision making so that retirement distributions can be optimally timed and retirement location chosen in a way to minimize taxes.

Retirement Income Taxation

United States retirement income, except distributions from a Roth IRA, is required to be included in gross income for US tax purposes. Note that retirement income is classified as passive income, so the Foreign Earned Income Exclusion  does not apply.

Depending on the foreign country you are living in and the visa type, your retirement income might also be taxed by the country you are living in. The good news is that in most cases you will not be double taxed – the Foreign Tax Credit  will offset this additional tax.

Social Security Considerations

With only a few exceptions, Social Security benefits are taxed the same when residing in foreign countries as they are in the United States. Social Security payments are not subject to US tax if you are living in the United Kingdom, Romania, Canada, Egypt, Germany, Ireland, Italy (if you are an Italian citizen), Israel, or Romania.

Note that Social Security benefits are taxed for individual filers with combined income over USD 25,000, and combined income over USD 32,000 for those filing jointly. Married couples filing separate returns usually will be subject to tax as well.

It is also important to realize that the United States has placed sanctions on several countries that forbid sending of Social Security benefits to these countries. After moving to a sanction-free country Social Security benefits can be collected, including those denied during your time in a sanctioned country. The sanctioned countries are Cuba, North Korea, Azerbaijan, Belarus, Georgia, Kazakhstan, Moldova, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, and Vietnam.

State Tax Requirements

Each state has different requirements, so be sure to research the specific requirements for your current state of residence. Some states, such as Florida, Texas, and Nevada do not impose state taxes. Some states, such as Virginia, Maryland, and Colorado require those retiring abroad to file state tax returns even if they have no tax obligation.

Social Security benefits and retirement income are not subject to state tax while living abroad. Most rental property income, however, is taxed by those states that impose income tax.

Retirement Account Distributions

Although retirement account distribution requirements are really not any different when residing abroad, they are a key part of retirement financial planning, with some serious penalties if a mistake is made.

During the year that you reach age 70 ½, you must take an RMD, or Required Minimum Distribution from your 401(k) or IRA. You can always withdraw more, but you must take the minimum, which is based on the account value and your age. If you do not withdraw at least the RMD, you will be penalized 50% of the difference between the RMD and what you withdrew.

Financial Reporting

It is vitally important that you understand your reporting obligations while living abroad. If your total aggregate accounts outside the United States exceed USD 10,000, you must file form FinCEN 114 . This form is only informational – that is, there is not a tax obligation associated with it – but the form is mandatory for compliance purposes. For higher account thresholds, Form 8938  is required. Again, this is only informational to help the US Treasury track the global flow of money.

These are the thresholds that trigger Form 8938 for US residents living abroad:

Survivor Benefits

One reason many people choose to retire abroad is that they are married to a non-US citizen. Because of this, survivor benefits are a concern. Although there are exceptions, in general a surviving non-US citizen spouse will stop receiving Social Security benefits if they are outside the United States for 6 consecutive months.

Survivor Benefits

A surviving spouse may receive Social Security survivor benefits if they are of retirement age, the United States worker was receiving benefits, they did not remarry, and they meet one of the following requirements:

  1. Citizen of Austria, Belgium, Canada, Chile, Czech Republic, Finland, France, Germany, Greece, Ireland, Israel, Italy, Japan, South Korea, Luxembourg, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, and the United Kingdom
  2. Resident of Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Korea (South), Luxembourg, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, and the United Kingdom
  3. Foreign spouse and US spouse were living together in the United States for a minimum of five years during marriage. The five year minimum does not have to be continuous.

If these requirements are not met, the surviving spouse can move to the United States after they are widowed and complete the residency requirement to then qualify to receive Social Security payments.

Medicare Benefits

Concern for health care coverage goes hand-in-hand with retirement, especially when retiring abroad. Unfortunately, Medicare benefits are virtually non-existent for citizens living abroad. Although you are exempt from the Obamacare requirements while living abroad, you will most likely want to find some health care option available in your new country of residence.

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Why Sleep is the Most Important Variable to Control During the COVID-19 Outbreak

 

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A Quick Guide on Making Your Bird Feeder Squirrel Proof

 

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Should You Buy a Retirement Home Early?

 

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Have New Grandchildren, Want to Retire, Health Care Conundrum

Q&A with a Reader

Hey guys,

Really appreciate the newsletter and am looking forward to sharing with some of my clients.

I do have a question.

My wife and I are mid 50’s. We would love to hang up the cleats right now but we have this huge barrier here in American called “health Insurance”. It will be a few years before we can access medicare. We have no debt and 7 figures put away however have not found a solution for the health care situation. It would probably cost us 24k a year and that would not allow us to just live on investments.

We have new grandchildren so moving to another country is out of the question …. No way the wife would agree with that. Have you heard of any solutions for people in the US?

Thank you and cheers!!

Hi Scott!

Thanks for taking the time to write and for your kind comments on our newsletter. We appreciate it.

Your situation regarding early retirement and access to health care is a common one for everyone. No matter where one lives, it seems the issue of access to “health care” can be a stumbling block. Add to that the addition of grandchildren, and in some cases, forward movement towards early retirement can die on the vine.

However, let me say a few words about this, and possibly ask you a question or two, since there is no silver bullet that will satisfy everyone.

Do your children/grandchildren live close to you (same city or state, within convenient driving distance now). How stable are the careers of the parents? (meaning will there be a possible transfer, move, promotion to a new location in the mix?) Are your grandchildren in a good school district now (and is the intention for the family to stay pretty much where they live indefinitely)?

Life is full of change, some of it we plan for, some of it is thrust upon us without our consent or through an opportunity we cannot resist.

Retirement is a huge change as well. Will you be staying in the home you are living in now? Or do you plan to downsize?

The reasons I am asking these questions, is, that “right at this moment” Grandparents, parents and grandchildren are in a certain (convenient?) location… but that might not stay the same. Will that change in 3 years? 7 years? What’s the likelihood of that situation changing? With our mobile society, the chances are pretty good.

I cannot tell you how many grandparents we know who have moved to the location of the grandchildren (or didn’t move to the location of their choice due to the grandchildren) … and then the parents of those children were transferred, got a promotion (or a divorce) or simply moved to a better area for work, better schools, better cost of living, and so on, thus throwing a wrench into the Grandparents’ plans for being close to the grandchildren growing up.

Sometimes the grandparents moved again to be close to the children, only to have the parents get another promotion or opportunity and take the kids with them.

We even know of some personal friends of ours whose children moved to Texas (after living in Oklahoma close to the Grandparents) and brought the children with them. Then our friends put money into their “forever home” and build a “Granny unit” in Texas, moved there, furnished it, bought a car, and so on… only to have the Son-in-law get offered a promotion to another state. They ended up selling all their stuff again and their forever home, which has been very stressful on the whole family.

My point is… the future is not written in stone.

For instance, if you plan to downsize in retirement, that downsizing can save you considerable amounts of money annually on housing costs. That extra savings can be placed towards visiting the grandchildren or purchasing travel tickets for them to visit you.

You might consider snowbirding and traveling in your retirement – or you might choose to go to a state where costs of living (and health care) are cheaper, also utilizing these savings for family visits.

You might choose to utilize medical tourism or purchase a concierge plan with a doctor (who – for an annual fixed price – offers you so many doctor visits, so many x-rays, etc.) which then also keeps your health costs down.

You might want start your own Health Savings Account where you place $10,000 (or more) each into an account yearly that you don’t touch except for health costs. In 5 years you would have $100,000 saved for medical expenses. In 10 years, you’d have $200,000 (and so on.) That’s a lot of medical care out of country for Medical Tourism.

Basically, you’d only need to get to the age where you could receive Medicare and go from there.

Even Canadians who have moved overseas or who snowbird have to return to their home country after 6 months in order to keep their health care plans active. Or they could let their country’s health care plan go, and purchase something locally in their new country..

Again, my point is… there are options. Nothing is frozen or unmovable. Chances are, things are going to change in a few years regardless.

When did you think of retiring? 1 year? 5 years? – If it’s 5 years, this gives you plenty of time to activate your personal HSA, the children will be older, and you could continue to research your options.

What do you plan to do with your time away from your normal work/job/career? – If you plan to keep your same home, don’t like to travel or don’t like the idea of snowbirding, you might want to golf, play tennis and bridge, work in the garage on a hobby (building sailboats, wordworking, doing sculptures, etc.) or volunteer in your community.

What kind of retirement are you thinking about?

These, actually, are the questions you need to think about and discuss together. Because the style of retirement will dictate many things financially, including going to see the kids if the parents take a promotion out of state or country. (Our good friend’s daughters both moved. One took the husband and kids and moved to Colorado, the other moved with her husband to Asia. Both of them did this for work opportunities.)

Below are some articles on this whole topic which might give you some insight, or which might move the sides of the box you have placed the description of your retirement into.

Everyone is different, there is no “one right answer.” I would suggest dreaming a bit about what retirement means to the both of you. It’s “easy” to say “We can’t do “X” because of 1) the grandkids 2) costs of health care 3) I don’t know what I’d do with my time 4) I can’t imagine leaving my beloved home 5) we have pets 6) I don’t want to make new friends 7) something else.

We can always find a block if we want to. It’s scary to move out of a comfortable routine, no doubt. And maybe you don’t want to move out of a comfortable routine. That’s ok too!

I hope these questions and different perspectives help you to shake things up and be able to move some mental furniture around.

You absolutely can find a workable, satisfying solution for yourselves, and still retire early, if that is what you want to do.

Wishing you both all the best.

Thanks again for writing.

Articles are below.

Akaisha

How to Fail at Early Retirement

Worry Free Housing

Why your house is a terrible investment

Going Naked

Comments on Going Naked

Top 10 Q&A on Medical Tourism

Cancer Treatment in Guatemala

Buying Medical Care vs Buying Medical Insurance

Stem Cell Therapy

Orthopedic Care in Guatemala

Medical Insurance and Health Insurance Options

Medical Tourism

Relocation

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Should You Go for Alternative or Complementary Therapy for Cancer Treatment?

About the Author

Lauren Cole is the Content Marketing Strategist of Dayspring Cancer Clinic, an alternative cancer treatment center located in Scottsdale, Arizona. When not working and writing content, she enjoys gardening and reading books.

Chemotherapy, radiation, and surgery are conventional cancer treatment methods. Cancer patients, however, have the option to undergo therapies and use medical products that don’t fall within the scope of standard cancer treatments. These treatments are categorized as Complementary and Alternative Medicine (CAM), and they are proving to be in wide use among cancer patients.

The question is, is going for complementary and alternative cancer treatments the right decision for cancer patients?

Complementary and Alternative Therapy Are Not The Same Thing

It’s easy to lump alternative and complementary therapies together since they’re not standard cancer treatments. However, alternative therapies are quite different from complementary ones.

When a specific cancer therapy is labeled as “alternative,” it means it’s being used as a substitute for chemotherapy, radiation, surgery, and other conventional approaches to cancer treatment. Eschewing FDA-approved anticancer drugs for a special diet or some type of herbal medication is a primary example of alternative cancer treatment.

On the other hand, complementary cancer therapies are precisely what the phrase denotes: they complement standard cancer treatments. Complementary therapy is often used not only to manage the symptoms that cancer patients experience, but to improve their quality of life as well.

There are times when an oncologist recommends a specific complementary therapy to go with a patient’s conventional cancer treatments. It’s called integrative treatment, which, as the name implies, integrates safe and effective CAM treatments with standard cancer therapies.

Examples of CAM Treatments

Cancer patients who decide to undergo CAM therapies may be asked to take dietary supplements, herbal medicine, and other non-standard medicinal products. It’s also common for them to undergo such treatments as acupuncture, aromatherapy, massage therapy, and even music therapy. Activities like yoga and visualization are also encouraged.

Reasons Cancer Patients Opt For CAM Treatments

The number of cancer patients opting for CAM therapies has been steadily increasing over the years. According to one study, 85% of cancer patients in the United States admit to CAM use.

Cancer patients use complementary and alternative therapies for a variety of reasons.

Many CAM therapies are purported to help patients deal not only with the symptoms of cancer but the side effects of standard treatments like chemotherapy as well.

Some cancer patients believe that since most complementary and alternative therapies are “natural,” they’re less toxic than conventional therapies. There’s also the immune boost that some CAM practices claim to provide.

Having cancer can be quite stressful, and the focus that many CAM treatments have on helping patients calm down and relax is perceived to be key in relieving themselves of stress.

In many cases, CAM therapies are often used to improve the quality of life of cancer patients. As mentioned above, cancer patients have to endure the symptoms of their disease and the aftermath of chemotherapy, radiation, and other conventional treatments. Proponents of CAM treatments claim they can alleviate the suffering of cancer patients and help give them a better quality of life, even when the battle is nearing the end of the line.

Is CAM Therapy The Right Decision?

Let’s face it: there is no cure for cancer just yet. Even conventional cancer treatments do not guarantee that they can defeat cancer all the time. However, many patients have seen their cancer go into remission after standard treatments, which attest to their efficacy.

Many CAM therapies, on the other hand, are deemed to be generally safe after careful evaluation. Still, more studies and medical trials are needed before they can be definitively regarded as highly-effective cancer treatments.

Then again, if you’re a cancer patient and you’re considering undergoing CAM therapies for any of the reasons mentioned above, then go for it, by all means. After all, whether to go for conventional treatments or CAM therapies is a personal decision that only you have every right to make.

Just keep in mind that if you choose the CAM route, it’s still best to consult your oncologist or your personal physician about it. While doctors can only make recommendations, they can at least educate you about possible contraindications of CAM treatments to your standard medical care. It’s also possible that your doctor might help you find a reliable CAM practitioner for your cancer treatment needs.

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Germ-free kitchen: 4 ways to help you get there

 

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Thank you!

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