Americans who decide to move abroad often do so because of their love of travel or their passion for a foreign culture. While exploration and adventure are clear reasons for moving outside of the United States, the financial benefits for Americans living abroad are less obvious. In reality, the monetary benefits for American expats go far beyond favorable exchange rates – and may even outweigh the lifestyle benefits, from my long-time expat perspective. While living abroad, Americans can enjoy financial benefits that allow them to lower costs, increase savings, and meet long-term budget goals.
Spend less and save more by living abroad
Most of the most popular destinations for expats have one thing in common: the average cost of living is lower than in the United States. For years, countries like Portugal, Panama and Costa Rica have attracted American retirees, entrepreneurs and travel enthusiasts. In these countries, a single American can live comfortably for $ 1,500 to $ 2,200 per month, depending on whether they choose to settle in urban or rural areas.
Getting more for your money has obvious short-term benefits, which is why many retirees are drawn to these affordable countries. However, this overlooks the less obvious benefit for young Americans. Expats who cut their living costs earlier in life can save more and invest in building wealth over years or decades, which can make living abroad a smart financial decision in the long run.
Claim tax credits and deductions
Although Americans living abroad are required to file U.S. income tax returns every year, that doesn’t necessarily mean their tax burden is increasing. In fact, expats may be able to reduce their taxes to zero or get a refund by making one or more tax credits and deductions available to them. The most common deduction, the exclusion of income earned abroad, works by reducing the taxable income of the expatriate, which in turn reduces the tax payment due. Other deductions may be claimed for the payment of foreign tax, childcare, educator fees and housing.
Collect social security benefits abroad
Americans who have worked in the United States long enough to become eligible for Social Security will be happy to know that they can keep their benefits when they retire overseas in many countries. There are some countries where benefits cannot be sent, including Cuba and North Korea, but many common destinations are enabled. the approved list.
Access affordable health care
Health care in the United States is among the most expensive in the world. In many cases, the same medicine or a procedure of comparable quality will cost less abroad than in the United States This means that expats can save a significant amount of money while enjoying quality medical care in many foreign countries.
In addition, retirees living abroad are eligible for Medicare. Although Medicare does not cover medical costs in foreign countries, it does cover health care in the U.S. Expats who may be returning to the U.S. full time or going for emergency medical treatment should consider purchasing Medicare as well as their overseas health care coverage.
Receive a monetary incentive to live or retire abroad
Many countries and regions offer incentives to settle in their communities and contribute to their economy. Depending on the location, you may be able to claim a premium for a variety of reasons. For retirees, Panama’s Pensionado program offers discounts on utilities, mortgages, health care and more. Saskatchewan rewards recent college graduates who choose to settle in the Canadian province with a discount of up to $ 20,000. Other regions offer housing, land and other financial benefits to entice young professionals and families to relocate to remote areas or growing cities.
Seize business and innovation opportunities
Foreign economies can offer entrepreneurs and professionals opportunities beyond what they find in the United States. In some sectors, companies will have fewer competitors and lower barriers to entry to obtain more financing opportunities outside their home country. Overall, removing geographic boundaries gives entrepreneurs the ability to select the best financial environment and potential customer base for their business model, thus increasing their chances of success.
In addition, some countries offer incentives to help finance start-ups and develop local businesses. For example, the Start Up Chile program, which was designed to attract tech companies to the country, offers seed capital and visas to approved applicants. Likewise, Enterprise Ireland funds a variety of companies located on the Emerald Isle, including manufacturers, online retailers and academic researchers who plan to commercialize their technology.
Find the right solution for your financial goals
Regardless of age or profession, living abroad can offer many financial benefits to Americans. Individuals and entrepreneurs should explore the unique advantages offered by each country to determine which one best suits their financial needs. By choosing the right location, you can increase your personal wealth, improve your business performance, and reach your financial goals faster.
The information provided here is not investment, tax or financial advice. You should consult a licensed professional for advice regarding your specific situation.