I’ve always felt like a stranger in a strange land. I was an overweight kid growing up in image-conscious Los Angeles. I was a city boy in my animal science classes in eastern Washington (students wore cowboy hats and huge belt buckles to class; I had thought that style was a Hollywood affectation). I was an areligious person in the Deep South (imagine my disbelief when someone explained what a promise ring (aka purity ring) was). I wanted to be able to recycle in libertarian Arizona.
I don’t think I’ve ever really fit in.
When Dr. Jim Dahle interviewed Robert Glazer on the WCI podcast recently, they talked about aligning values with your partner, your vocation, and your community. Partner, check. Vocation, check. I wanted better alignment with my community. I’ve wanted this for over 20 years. Since we were financially independent, we finally had the resources and the personal and professional situation to make it happen.
We decided to pivot from being early retirees to émigrés.
Leaving Your Country to Live in Another
There are thousands of variables you can look at when examining where you might want to live. Ours was a high Freedom Index (which “rates people’s access to political rights and civil liberties in 208 countries and territories”), a relatively safe area, good healthcare, and a visa allowing retirees. We relied on data rather than anecdotes. We spent a fair amount of time and energy on the search. It may not have been comprehensive, and we were surely bringing other biases to the analysis, so don’t assume this is the “best.” At one point, we settled on Spain or the Netherlands.
Spain has the Non-Lucrative Visa, where you can reside in the country without working for a number of years if you have a certain level of income. Our retirement budget definitely fit the bill, so that was an option. We could get permanent residency after five years and citizenship after 10. We have some Spanish language skills, and we had visited before and loved northern Spain.
The Netherlands has the Dutch-American Friendship Treaty (DAFT), which allows you to be a resident if you form a business and invest just €4,500. We could definitely do something online that could fulfill the requirements without having a full-time business. It’s possible to get permanent residency after five years, but you have to pass a language test. Our research indicates it’s difficult to learn Dutch. We spent a week in Amsterdam (which we realize isn’t representative) and really enjoyed all the walking and biking.
We were contemplating these options when we realized that, until we got permanent residency, the host countries could change the rules and kick us out. We wanted somewhere we could go and stay. We wanted to fit in in our strange, new land.
We decided to reorient to find somewhere we could get permanent residency relatively quickly. We couldn’t identify a country that fit our criteria AND where we didn’t have to work. Pro tip: most countries don’t want you, especially if you’re a retiree. Instead, we focused on finding somewhere we could get a job, an associated visa, and then get permanent residency quickly.
This dramatically narrowed our scope because, even though we have some Spanish language skills, neither of us has the language expertise to convey the nuances of our professions in Spanish. That unfortunately meant we'd have to look at English-only countries. England has a long time to permanent residency, so that was out. We heard that the healthcare system in Ireland is atrocious. Still maintaining our previous goals of a high Freedom Index and safety and a short path to permanent residency, that left Canada, Australia, and New Zealand. Fortunately, each of those had position postings in both of our specialties. After a dozen applications and quite a few interviews, I managed to secure a position in New Zealand.
As soon as I told my wife, she said, “Well, New Zealand is basically the best country.” I agreed, and we were off!
More information here:
Navigating the Minefield of Foreign Investing as a US Expat
5 Financial Considerations for American Doctors Wishing to Live Abroad
When Everything Clicks into Place: How Foreign Travel Can Make You a Better Doctor
The Mental Transition from Early Retirement Back into a Foreign Workforce
This was obviously a transition for us—from early retirement and finishing our last year of work to working at least two (and potentially more) years to get permanent residency and maybe citizenship in another country.
However, this transition was, in some ways, easy for us. We were already going to undertake a major life transition. Pivoting our life direction at that point was a major mindshift change but not a major logistical change. We were already going to move states and change our daily routines; what’s moving to another country?
Friends of ours who have expressed interest in moving overseas faced more significant barriers since they are settled where they are and in careers and family situations that are stable. The mindshift change from retirement to continuing to work wasn’t too hard—we felt finding a community would be worth the additional years of work. I thought I would enjoy the work more than I had been, and, after just a couple of months, that turned out to be correct.
It’s similar to what I’ve been doing—teaching and research and clinical duties at an academic institution—but I feel like I am helping animals and students more than in my previous position.
The Financial Implications of Moving to Another Country
Even though we are financially independent, there have been and will be significant financial ramifications of this decision.
Let's talk about the costs associated with going through the visa process and moving. Although the institution employing me would be paying for quite a bit of the process, we had to shoulder plenty of expenses. All amounts have been converted to USD for ease of comparison, but realize many of these were listed in NZD.
The fee from Immigration New Zealand for the visa for both of us was $3,850. The university hired an immigration company to help, and it covered all but $650, which was our responsibility. Our medical exams were $475 each. There were a bunch of little things, like getting more passport photos and having our passports sent by FedEx to the New Zealand embassy in Washington DC, that cost about $300. Our flights from Atlanta to San Francisco were $720. The institution was covering our flight to New Zealand, but we checked extra bags, which were $300. We had lodging for a couple of weeks, but we needed to find a rental relatively quickly. We had to pay a bond (basically a deposit) of around $2,000 for a furnished place until we could find long-term housing. We needed to get a car (the only thing we aren’t thrilled about is that New Zealand doesn’t have great public transit or walkability) and ended up buying a used Hyundai Ioniq for $15,700. As of this writing, we still need to get most of the things for a place—furniture, Wi-Fi, utilities, etc. It's difficult to budget, but maybe it'll cost $10,000.
Oh, and I forgot to mention the cats. Moving pets to New Zealand is incredibly expensive. My wife and I had an ongoing debate for months about it (I was con about taking our cats, she was pro). My rationale was, “We can help a lot of cats in New Zealand for $10,000,” and her response was, “Yes, but these are OUR cats.” The real problem is that I got the same quote from three different companies, and you can’t DIY this at all to reduce costs. Even though I’m in the veterinary profession and could call on the vast resources of a teaching institution, I couldn't do much to cut corners and bring down the overall price. DIYing it was actually MORE expensive—for example, the quarantine costs if I booked it separately from a company were actually higher. Ultimately, it cost us $5,000 per cat times two.
This put our visa and moving costs in the $40,000 area. We sold our car in the US for $15,800, so we had a total debt of around $24,200 in basically a four-month span. I’m glad we’re financially independent AND that our net worth has actually gone up even after we began our retirement spending plan earlier in the year.
Now, what about costs going forward? I see three major issues: taxation, investment accounts, and vanishing expenses. Before getting into that, there is a major deficit of high-quality information online about handling these questions. Nearly every resource will give you 80% of the information you need and then say, “Hire us to take care of this for you!” No WCI-type resources I can find to help you DIY. Just as an example, the links I gave below are some of the best I’ve found and were on page 2 of Google after reading about a dozen other pages.
With regards to taxation, New Zealand and the US have a tax treaty to prevent double taxation. You still have to pay US taxes, of course. Fortunately, these can be offset by the Foreign Earned Income Exclusion or the Foreign Tax Credit (you can’t claim both for the same income). For the first four years, New Zealand will not tax your foreign investment income. This is to incentivize you to move your investments to New Zealand. After that, however, the country will tax any gains in your foreign investments, including in taxable and tax-free (i.e., Roth) accounts, even if you don’t sell the assets.
On the other hand, New Zealand doesn't have capital gains taxes, so once you sell the security in your taxable account, you pay US capital gains tax but no New Zealand taxes. New Zealand tax brackets are all individual—no Married Filing Jointly benefit—and top out at 39% with an income of $180,000. There’s no standard deduction or much complexity to it, which makes it easy to calculate but not as advantageous as US taxes.
For retirement accounts, New Zealand does not recognize the tax-free nature of Roth accounts or HSAs, so if we take money out of those, they will be taxed by New Zealand but not by the US as income. For tax-deferred accounts, we would pay New Zealand taxes when we withdraw from them but would get a tax credit (e.g., FTC, noted above) against US taxes, meaning we probably would not owe any US taxes for that. New Zealand also has a tax-free account—Kiwisaver—which may or may not be a good deal for US expats because there are confusing rules for US citizens around owning foreign trusts (which Kiwisaver qualifies as) and foreign mutual funds.
Under vanishing expenses, the greatest has to be healthcare. We had budgeted $1,000 per month for an ACA plan in retirement, but since we are covered by New Zealand’s healthcare system, that expense evaporated. When we visit the US, we will have to get travel insurance, but that’s true of anyone who visits the US. We also won’t have to worry about liability insurance for our car in New Zealand, as that is largely covered by the Accident Compensation Commission (ACC) (although some people may want their own separate policy).
More information here:
Giving Up a $250,000 Salary to Retire Early Is Hard
The Bottom Line
Since we had planned to retire this year and since I will be making a decent salary in New Zealand for some time to come, our finances are pretty solid. My wife is executing her retirement plan, although it’s possible she may do something for money in the future. We are going to continue to pay for most things on our US credit cards and pay for that out of our retirement savings in our taxable account.
We’re going to sit on our HSAs and Roth IRAs for now and see if we like New Zealand enough to settle there permanently; then we have to make some decisions about them. We will save my income in New Zealand for an eventual home purchase, assuming we decide to stay. Because of the difference in healthcare costs, I expect the move to be a significant financial boon for us over time. At $12,000 per year in healthcare savings, that’s equivalent to having an added $300,000 in our invested assets. And that assumes US healthcare costs would go up at the same rate as inflation, whereas historically the costs have outpaced inflation.
I’m hopeful that the move will make us feel like we are living in a community that shares our values. I’m also hopeful that the hassle and expenses will balance out in the end. With as cloudy a crystal ball as everyone else, the only way to know is to try and see what happens.
Have you thought about moving to a foreign land when you reach your retirement age? Are the costs worth it? Where would you want to go?