The decision to retire abroad is one that is generally not taken lightly, but such a move might require Americans abroad to consult with an advisor who specializes in working with Americans abroad, especially as Americans face an ever expanding set of complications in the ever more globalized world.

Since the introduction of the Foreign Accounts Tax Compliance Act, Americans have found difficulties with things as simple as opening and maintaining accounts. In that vein, Walkner Condon wants to share a list of five key practical considerations before moving abroad. If you are retiring abroad, feel free to set up a time to speak with Keith Poniewaz at Walkner Condon Financial Advisors for a free consultation about managing the transition from the perspective of your finances.


1. Many large U.S. brokerages won’t keep accounts open for Americans should they move abroad.  However, if you work with an independent custodian and are associated with an Investment Advisor who will handle the requirements of “Know Your Client” and other U.S. Securities requirements, you should be able to change your accounts to your new address. See our blog post “What Is The Best Brokerage For Expats” for more information.

2. Given the increased reporting requirements, opening a bank account in your new country of residence can also be problematic. Generally, large global banks will allow you to establish a bank account in your new country and help manage local bills and currency. However, don’t think you can open a foreign account with the US branch of a global bank (you can’t walk into the office of HSBC or UBS in Los Angeles and open a German account there).  This is something that must be done in the country.  Generally, we recommend a “pre-visit” to help start the process of opening accounts and gathering paperwork.


3. Who should handle your currency transactions? Many online brokerages can handle currency movement at a lower cost than banks (even international banks) with Interactive Brokers being the likely least expensive option for those willing to learn its system and interface. Generally, U.S. banks are the next most expensive in terms of transaction costs and the spread they charge on such transactions. Finally, there are local banks (the most expensive) which can charge up to 3% for a currency transaction.


4. Building an effective portfolio to meet your cash flow needs and managing the transition before you go is something we’ve discussed extensively.  Check out our white paper on the topic.


5. Given its reputation as a large government bureaucracy, Social Security and its website are actually quite helpful for those moving abroad to indicate where payments will be made and if your surviving spouse will continue to receive payments there.  One key consideration is that Americans in a foreign countries can have their cash deposited directly in their local bank account.  However, caveat emptor, foreign banks can charge a much higher amount per transaction to convert the U.S. Dollar payments into local currency.  Accordingly, it may be wiser to deposit into a U.S. account and then manage the currency conversion independently or with a trained cross-border financial advisor.


While Social Security can be deposited around the world, Medicare will only cover you should you live in the United States.  If you are leaving permanently, you will generally not need US medical coverage and will likely want to investigate local insurance options.  If you are considering a return to the United States, you’ll want to weigh the costs of starting and maintaining Medicare Part B versus paying the penalty should you start later in life.