Aside from the golden tan you're sporting, another lingering effect of a great vacation is the daydreaming you may catch yourself indulging in.
You know, those musings that can pop up at the most inopportune times—like at that first staff meeting back at the office—about whether you could call that gorgeous European town, Caribbean island or Asian metropolis home.
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Well, it turns out that living the international life is on many a bucket list.
More than a third of Americans surveyed by TransferWise, a peer-to-peer money transfer service, say they'd consider packing and heading overseas—permanently.
But between the costs of living abroad, paying two sets of taxes, and finding employment, putting down roots in another country can be a daunting undertaking—especially when it comes to your finances.
So to see what you’d really need to think about before applying for that visa, we reached out to Americans who are contemplating an international move—and then asked experts to weigh in on the pros and cons of their would-be expat lives.
Read on to see if the grass really would be greener on another continent—or whether they’d actually be better off staying put in their own backyard.
"I Want to Leave Philadelphia for a Bucket-List Life in London"
Who: Suzanne Wolko, 45, business manager
Why Suzanne Wants to Move: "In March I was laid off from my longtime job at an investment firm, which gave me time to reevaluate what truly makes me happy.
The answer: seeing the world.
For years London has been on my list of favorite places to visit. Now that I'm no longer tied to a job, I can't help but wonder what it would take to relocate to the U.K.
I know London is expensive, but so is Philadelphia. My biggest expense is the small home I own—between the mortgage, taxes and utilities, I'm on the hook for about $2,000 a month. I also pay $350 for a car lease.
One of my other big concerns is retirement. Up to this point, I’d been saving 6% of my salary in a 401(k), and I'm wondering what will happen to my contributions. And how would moving abroad affect my Social Security?"
Running the Relocation Numbers: The first thing Suzanne should delve into is the cost of housing.
According to the HomeLet Rental Index, the average price for a rental in London is 1,500 pounds per month—that's approximately $2,300.
The upside, however, is potentially not having to own a vehicle—up to 70% of Londoners don’t have a car, relying instead on public transportation that costs from 123 pounds a month (about $190) to 380 pounds (about $590), depending on the commute.
As long as Suzanne is paying U.K. taxes, she can also take advantage of the country's public health system, says David McKeegan, cofounder of Greenback Expat Tax Services, who lived in London for six years.
Whatever work credits Suzanne receives for paying into U.K. social security can be transferred to the U.S. if she decides to return.
And while it's true Suzanne wouldn’t be able to contribute further to her 401(k)—although she could still receive distributions in retirement—she can make tax-deferred retirement contributions through a U.K. employer, says Jonathan Lachowitz, a Certified Financial Planner (CFP®) and founder of White Lighthouse Investment Management, which specializes in cross-border financial planning.
Suzanne's U.S. Social Security benefits, meanwhile, may not end up being affected because the U.S. and U.K. have a Totalization Agreement, says McKeegan.
This means that whatever work credits Suzanne receives for paying into U.K. social security can be transferred to the U.S. if she decides to return within a few years. If she stays permanently, those payments would fund her U.K. pension.
Income taxes, however, can get complicated, since Americans living abroad are still required to file U.S. returns, in addition to the foreign taxes they pay. Fortunately, the U.S. and U.K. have a tax treaty, an agreement that reduces taxes for foreign residents living in each other's countries.
Plus, as with most expats, Suzanne may be eligible to take foreign tax credits and the foreign earned income exclusion, which exempts up to a certain amount of foreign income from U.S. taxes ($100,800 in 2015).
What Suzanne Thinks: "This is all good to know, especially the clarity on my Social Security and 401(k) situations. And the health care information gives me some peace of mind because I wasn't sure if I would qualify for coverage.
The cost-of-living details seem in line with my research—I've actually seen flats advertised for up to $4,000 a month! But not needing a car means one less expense to worry about.
So it seems I need to find a U.K. company willing to sponsor my employment—otherwise, all of this could be moot! I'm currently putting my feelers out to see if I can snag any leads."
"We Want to Leave Virginia to Live the Good Life in Costa Rica"
Who: Stefanie Antosh, 33, communications coordinator, and Edward Erickson Jr., 45, retired veteran
Why They Want to Move: "I was medically discharged from the Navy last year, and now work as a communications coordinator in the health care industry. I live with my boyfriend, Edward, who is also retired from the Navy and seeking work as a corporate or university recruiter.
Costa Rica popped up on our radar when I heard a friend of mine was living a dream life there on much less than my $44,000 salary. The country is also a tourism hub, which is attractive to me because I’ve considered becoming a scuba instructor.
Even if we move to Costa Rica with no jobs, Edward and I collect about $46,000 a year in tax-free military disability and pension benefits. I also bought a $245,000 house in December that I'd like to rent out. My mortgage is about $1,400 a month.
I’m also curious what the process would be to bring over our three big dogs, and what the health care situation is—eventually, we’d love to have a baby.”
Running the Relocation Numbers: Stefanie and Edward should get some good bang for their buck in Costa Rica.
According to International Living magazine, rent for a large apartment in Costa Rica averages just $700 a month.
Increased interest from U.S. expats has, however, driven up the price of property in coastal areas. In the Osa Peninsula, for example, a beachfront home starts around $165,000—although that's still a third less than the couple's Richmond, Va., home.
Costa Rica is known for its excellent national health care, with medical costs coming in at a third to a fifth of what they run in the U.S.
According to Lachowitz, Stefanie and Edward's biggest potential problem is taxes because Virginia is a domiciliary state. So if they ever moved back, they could undergo a domiciliary audit. The state may assert they didn’t intend to stay overseas forever, so they should pay state income taxes for the years they are gone.
"Most people find out about this by surprise after they come back and owe thousands of dollars in unexpected tax bills," Lachowitz says.
McKeegan also points out that there's currently no tax treaty between the U.S. and Costa Rica—so any U.S. military pension benefits would be taxable.
On the bright side the couple's veteran status means they have global health coverage. But even if their insurance doesn’t cover everything, Costa Rica is known for its excellent national health care, with medical costs coming in at a third to a fifth of what they run in the U.S.
As far as the furry family members go, a short-term visit requires dogs to receive five types of vaccinations and other supporting documents, so a permanent move may require even more paperwork. Plus, there may be costs associated with any quarantine policies, says Rebecca Washburn, an international relocation consultant with Sterling Relocation.
What Stefanie Thinks: "After weighing all the advice, I'm ready to move to Costa Rica tomorrow!
Given the super low cost of living, it's reassuring to know how far our money would go. I was also happy to hear about the high-quality health care.
The most helpful bit of information was knowing that Virginia is a domiciliary state. If we did come back to the U.S., it sounds like we'd have to settle elsewhere.
Having traveled internationally with our dogs before, the short-term travel rules for Costa Rica sound pretty standard. So the next step for us is ironing out all the details for a permanent move.”
"We Want to Leave Milwaukee for a More Cultured Life in Helsinki"
Who: Jennifer Billock, 31, freelance writer, and Kyle Young, 31, freelance music teacher
Why They Want to Move: "My husband, Kyle, and I live in what I call-middle-of-nowhere Wisconsin, southwest of Milwaukee, so we’re looking for a change.
We've visited Finland before and were immediately taken by Helsinki—the food, the culture, the clean air, the public transportation. In a dream world, we'd pick up and move tomorrow! But I'm wondering how realistic that is.
As a freelance writer, I'd be able to keep the majority of my clients, and Kyle feels confident he could find work there.
Currently, we make about $45,000 a year combined, which goes a long way in Milwaukee—we own our home, with a $750 per month mortgage. So our major concern is the cost of living, which we understand is much higher in Helsinki."
Running the Relocation Numbers: Jennifer and Kyle should prepare for sticker shock compared to their housing costs now. According to cost-of-living website Numbeo, the average one-bedroom apartment in the center of Helsinki costs 1,025 euros (about $1,123).
Fortunately, the couple wouldn’t need a car—Helsinki even recently announced plans to overhaul its public transportation to further discourage car ownership. Currently, the average price for a monthly transit pass is a wallet-friendly 50 euros (about $55).
As freelancers, if their income comes from the U.S., and not Finland, then Jennifer and Kyle might consider limiting their stay in Helsinki to avoid paying Finnish taxes.
The biggest headache could be the couple’s employment status. Trying to figure out their tax obligations as freelancers is complicated—but if their income comes from the U.S. and not Finland, then Jennifer and Kyle might consider limiting their stay in Helsinki to avoid having to pay Finnish taxes.
"Some countries only tax you if you're in that country for over 180 days in a given year," McKeegan says. "So some people choose to split their time between two or three different places [on tourist visas]."
And in order to take advantage of the country’s public health care, Jennifer and Kyle would need to become Finnish residents.
One solution could be to find an independent company that offers global health insurance, which is what McKeegan has for his family. "They could be better off financially having their own policy and not being tied to any one international tax system," he says.
Their lives would also be easier if they found employers willing to sponsor them, says Washburn, adding that working as an English teacher may be a good option for Jennifer. "It shouldn't be difficult to find that kind of position there,” she adds.
What Jennifer Says: "I found the health insurance information really helpful—anything that simplifies health care costs is always a good thing.
However, what I'm not crazy about is going the teaching route, because I've taught in the past and didn't feel like it was a good fit for me.
But I think the most relevant bit of guidance has to do with our freelancer status. That advice has me thinking that spending only part of the year in Helsinki would make a lot more sense, especially with all the tax complications.
In fact, getting around on a tourist visa sounds pretty appealing. Helsinki's proximity to the rest of Europe is one of the major reasons for wanting to move there—wanderlust kind of rules my life.
So some of the negatives, like the cost of living, doesn't affect our decision. We still want to go!"
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice, either in the United States or in any foreign jurisdiction. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.