Key Points
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No matter where you land, you remain responsible for paying U.S. taxes.
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Work with experts who understand the unique financial issues facing expats.
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Don’t overlook seemingly minor issues, like purchasing new insurance.
Whether you’re moving outside the U.S. due to the high cost of living, political divisions, or simply because you’re ready for a new adventure, such a big move will lead to dozens of details you’ll need to attend to before you go.
Among the most pressing matters are the financial steps you should take. For example:
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1. Learn more about your tax obligations
As a U.S. citizen, you remain responsible for paying your taxes, regardless of where you live. The IRS makes it easy to find the information you seek. You may also consider consulting an international tax specialist who understands expat taxation, including the Foreign Earned Income Exclusion and the Foreign Tax Credit.
2. Build a new banking relationship
When retiring abroad, set up banking in your destination country before moving outside the U.S. (if possible). You’ll probably want to maintain your U.S. bank account for Social Security deposits and other U.S.-based income, but the new bank account will come in handy for daily expenses. Link the new account to your U.S. account for easier access to funds when you need them.
While you’re at it, set up cost-effective methods to transfer money internationally. Services like Wise, OFX, or specialized expat bank services are typically your best bet. Factor in fees and exchange rates when budgeting.
3. Study your healthcare options
One of the largest expenses most people face — especially in retirement — is healthcare. Medicare generally doesn’t cover healthcare outside the U.S., so you’ll immediately need alternative coverage. Look into the quality and cost of local healthcare in your destination country. Healthcare coverage typically includes international health insurance, local health insurance, or both.
No matter which type of coverage you decide on, you may be pleasantly surprised to learn how much less high-quality healthcare costs in other countries.
4. Secure adequate insurance coverage
If you’re keeping property in the U.S., make sure it remains covered. And because U.S. auto insurance typically only covers you in the U.S. and Canada, purchase an international policy if you plan on driving. A seasoned insurance agent should be able to help.
5. Look into the challenge currency exchange poses
One of the primary reasons Americans move out of the U.S. is the cost of living. While it’s true that it costs less to live in many other countries, living abroad means dealing with currency fluctuations that impact your purchasing power. To mitigate risk, you may want to keep funds in multiple currencies and time large transfers from the U.S. strategically. Rather than a traditional bank, look for a currency exchange specialist who can help you land the best exchange rate.
6. Prepare to adjust your portfolio
Ensure that your portfolio remains balanced by working with a financial advisor familiar with expat investments. Currency fluctuations, access to the U.S. markets, and foreign tax implications can each impact your portfolio.
You’ll notice how often working with experts has been mentioned. That’s because the best time to nail down financial issues is before you leave the U.S., while you still have access to experienced professionals who can help you protect your assets.
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