US Citizens retiring in Ireland: Financial Planning considerations
May 16, 2024
US Citizens retiring in Ireland: Financial Planning considerations
Retiring to Ireland as a US citizen or returning as an Irish native can be an exciting prospect, but it also requires careful financial planning. We have seen a huge increase in former Irish emigrants who left Ireland in the 1980’s & 1990’s looking at returning to Ireland as a safe place to live or retire. It’s important to consult with someone in Ireland who specialises in this area to ensure you structure your finances in a way that is favourable on both sides of the Atlantic.
Here are 7 financial tips for US-connected individuals looking to retire in Ireland:
Understand Irish Retirement Systems:
Take the time to familiarize yourself with Ireland’s retirement and pension system, such as the State Pension and especially private pension plans. Determine if you are eligible for any Irish social security benefits and how they may supplement your retirement income on top of your US Social Security entitlements. There are a wide variety of Irish pension structures so it’s best to consult a Certified Financial Planning firm such as Imperius Wealth for unbiased advice in this area.
US Retirement Plans:
Saving and investing for retirement has been ingrained in the US psyche for decades and with direct exposure to tax efficient pension vehicles (401k’s, 403b’s and IRA’s). Analyse your contribution plan to retirement accounts like 401(k)s and IRAs in the US, as these can provide tax advantages but note these pensions will be taxable in Ireland when you wish to access them.
Many US pension & investment custodians will ask you to move your account if you cannot show a US address anymore. This can have a range of knock on impacts if you are being forced to access pensions before 59 1/2 years of age or forced to sell investment before you want to. There are a small handful of solutions though that are SEC regulated and available to US Citizens in Ireland.
Currency Exchange and Currency Risk:
Given the potential for fluctuations in currency exchange rates, consider strategies to mitigate currency risk. You may want to maintain a mix of assets in both US dollars and euros to help protect your retirement income from adverse currency movements.
The strength of the US dollar currently versus the Euro will give you a lot of buying power in Ireland but that can change in a matter of weeks of months.
Tax Planning:
Consult with Imperius Wealth and our US/Irish tax professional partners who specializes in international taxation to optimize your tax situation. Understand the tax implications of your income sources, such as pensions, social security benefits, and investments in both the US and Ireland is vital. Utilize tax treaties between the two countries to your advantage.
Perhaps you can take advantage of being a ‘non-domicile’ Irish resident individual to mitigate tax on investments.
Healthcare and Insurance:
Ensure you have appropriate healthcare coverage in Ireland. While Ireland has a public healthcare system, private health insurance can provide additional coverage and faster access to medical care. Investigate your options for health insurance and factor this into your retirement budget. It’s way cheaper than US private healthcare.
You can get quote from Imperius for private health insurance that will cover you all over the world.
Cost of Living and Budgeting:
Ireland can have a higher cost of living than some parts of the US. Research the cost of housing, groceries, transportation, and other essentials in your desired retirement location. Create a comprehensive budget that accounts for your expected expenses and plan accordingly. Generally the more western and rural you are living in Ireland the lower the cost of living.
Estate Planning:
Update your estate plan to account for your international retirement. Ensure your will and any other legal documents are in order to protect your assets and ensure they are distributed according to your wishes, both in the US and Ireland.
Get an understanding of how the Irish Capital Acquisitions Tax (CAT) can impact you and your estate versus US Estate Tax. There is a massive difference in the tax free thresholds for each inheritor/ beneficiary depending on where they live and the relationship to the deceased.
Seek Professional Guidance:
Given the complexity of retiring abroad, it’s advisable to consult with financial advisors who specialize in international retirement planning. They can help you navigate the intricacies of cross-border financial management and ensure that your retirement goals are met.
Remember that the specifics of your retirement plan will depend on your individual circumstances and financial goals. These tips provide a general guideline, but it’s crucial to tailor your strategy to your unique situation and regularly review and adjust your plan as needed.
Contact mike.shannon@imperiuswealth.com to discuss your situation as Mike has lived and worked in the USA and is very familiar with US/Irish Financial Planning.
Need assistance with your retirement plans? Talk to Mike today!
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