How to Retire in Turkey: Costs, Visas and More

How to Retire in Turkey: Costs, Visas and More – SmartAsset

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Turkey is filled to the brim with beautiful architecture, art and a melange of cultures that reaches back thousands of years. It’s home to artifacts from communities like the Hittites, Ancient Greeks, early Christians and Mongols, which fill this nation of some 82 million, with a rich sense of history. Lying as it does at a crossroads of Europe and Asia, visitors can see a unique blend of Western and Eastern influences. Its Mediterranean and Black Sea beaches are renowned for their beauty. Istanbul’s Grand Bazaar extends across 58 covered streets hosting some 1,200 shops. If you’re considering retiring in Turkey, here’s an overview of some basic information you’ll need. A financial advisor can offer valuable guidance as you consider retiring abroad.

Cost of Living and Housing

It’s much less expensive to live in Turkey than it is to live in the U.S. Without accounting for rent, Turkey’s cost of living is 53.56% lower than in the U.S. on average, according to Numbeo, a cost-of-living database.

U.S. rent prices are 556.13% higher when stacked against those in Turkey, on average. To rent a one-bedroom apartment in a city center will run you around $215.26 in Turkey, whereas a comparable setup in the U.S. would run about $1,340.16. If you wanted to pursue purchasing an apartment in Turkey, you would find that the price per square foot in a city center is averaged out to $83.07. In comparison, the same square footage in a similar city location in the U.S. would cost about $328.96.

To further illustrate the contrast, we can compare Istanbul, Turkey’s most populated city, to the U.S.’s New York City. To maintain the same standard of life, you would need around $8,203.10 in New York, which contrasts starkly to the approximately $1,960.45 necessary in Istanbul, assuming you rent in both.

So, if you’re looking for a country to retire in with both affordable renting prices and lower property costs to make the most out of your savings, Turkey may be a solid option.

Retire in Turkey – Visas and Residence Permit

Turkey doesn’t have a visa specifically for retirement, so you have to apply for a residence permit instead. This requirement applies to anyone who intends to remain in the country more than three months. You’ll first have to apply for a short-term residence permit, and you must do so within a month of your arrival in Turkey. There is an online application you fill out at the Turkish Ministry of Interior’s website. Once you finish, it will prompt you to make an appointment with the nearest DGMM office to continue the process and pay the fee your visa requires.

A short-term residence permit is issued on a two-year basis. After you’ve lived in Turkey uninterrupted for eight years under your short-term visa, you can apply for a long-term residence permit. These extend indefinitely.

No matter what residence permit you are applying for, you will likely need to show proof that you possess adequate assets. This can shift whether or not you have dependents, but a single person is generally required to have the equivalent to a month’s worth of Turkish minimum wage. As of early 2021, that would be around $400.

Retire in Turkey – Healthcare

The World Health Organization ranking of national healthcare systems puts Turkey’s at 70th out of 191. The central government body responsible for healthcare and related policies is the Ministry of Health (MoH). There is also a private sector and university-based care; however, the MoH is the main body responsible for providing healthcare. You can expect the quality of healthcare in Turkey to vary between regions. Although it’s cheaper than some of its European neighbors, access is limited in more rural areas. You’re more likely to have high-quality care in major urban locations like Istanbul – as well as the ability to communicate with your healthcare providers in English. This increase in quality is why most expats choose to go to private medical facilities over public ones.

All residents under 65 must have either public or private health insurance. Expats who have resided in Turkey for over a year under their residence permit can apply to have public health insurance through the state-run Sosyal Güvenlik Kurumu (SGK). Expats usually choose to supplement this with private insurance (or just choose private) to cover additional fees at private facilities.

As Turkey has grown as a country and political entity, it has experienced a great deal of reform around its healthcare system. It likely will continue to experience further changes in the future.

Retire in Turkey – Taxes

Like many countries, residents and non-residents are subject to different taxes in Turkey. Residents pay taxes on their worldwide income, whereas non-residents only have to pay taxes on Turkish-sourced income. The country uses a progressive tax scale, ranging from 15% to 35%, depending on your income bracket.

Turkey does possess a tax treaty with the U.S., which can provide some relief. You will only have to pay into one country’s Social Security program as a result, which in Turkey is a 14% flat tax for employees. Otherwise, there are also tax exemptions that may allow you to pay less on your U.S. income taxes. One example is the foreign earned income exclusion, which lets you exclude the first (approximately) $100,000 for foreign earned income if you can prove your Turkish residency.

Retire in Turkey – Safety

Each expat’s experience is unique. Some may travel through Turkey and find they encounter little to no issues on a security level. That’s not to say you shouldn’t be cautious. The U.S. Department of State’s travel advisory warns travelers either visiting or moving through Turkey to be wary of both terrorism and arbitrary detentions. The advisory heavily suggests that you avoid the Sirnak and Hakkari provinces, which are in the southeastern part of the country, as well as any area within six miles of the Syrian border to avoid terrorist activity. The State Department’s most recent report on human rights practices in Turkey bears a close reading, especially sections 1 and 6.

Although you should speak with locals and enjoy the culture, you should also be wary of your surroundings and keep an eye on political developments. It is also advised that you don’t engage with political topics online either since that can still be a red flag.

The Takeaway

Turkey is still in the process of significant political change, making settling down difficult for the average retiree. That, along with terrorism concerns, may encourage you to look at other countries instead. However, Turkey has a strong sense of identity with a warm populace who wants to share their cultural. That sense of belonging, along with the country’s beautiful features and its low living costs, may make the challenges worth it to you.

Tips on Retiring

  • Finding the right financial advisor who can help address your needs doesn’t have to be hard. SmartAsset’s free tool matches you up with local financial advisors in as little as five minutes. If you’re ready to be meet with advisors in your area that will help you achieve your financial goals, get started now.
  • Planning your retirement comes with its challenges, especially if you intend to move abroad. While Turkey may have low living costs, there still may be other financial burdens you have to address. To get an idea of what to expect, stop by our retirement calculator.

Photo credit: ©iStock.com/hadynyah, ©iStock.com/Nikada, ©iStock.com/TEZCAN

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.

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Indexed Universal Life (IUL) vs. 401(k)

Indexed Universal Life (IUL) vs. 401(k) – SmartAsset

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When creating your personal retirement plan, there are a variety of tools you can use to fund your long-term savings goals. An employer-sponsored 401(k) is one of them while indexed universal life insurance (IUL) is another. A 401(k) allows you to invest money on a tax-deferred basis while also enjoying a tax deduction for contributions. Indexed universal life insurance allows you to secure a death benefit for your loved ones while accumulating cash value that you can borrow against. Understanding the differences and similarities between IUL vs. 401(k) matters for effective retirement planning. Working with a financial advisor can also make a substantial difference in the amount of money you’ll have when you retire.

What Is Indexed Universal Life Insurance?

Indexed universal life insurance is a type of permanent life insurance coverage. When you buy a policy, you’re covered for the rest of your natural life as long as your premiums are paid. When you pass away, the policy pays out a death benefit to your beneficiaries.

During your lifetime, an IUL insurance policy can accumulate cash value. Part of the premiums you pay are allocated to a cash-value account. That account tracks the performance of an underlying stock index, such as the Nasdaq or S&P 500 Composite Price Index. As the index moves up or down, the insurance company credits the cash value portion of your policy each year with interest.

IUL is different from fixed universal life insurance or variable universal life insurance. With fixed universal life insurance your rate of return is guaranteed, making it the least risky of the three. With variable universal life insurance, your cash value account is invested in mutual funds and other securities so you’re exposed to more risk. An indexed universal life insurance policy fits in the middle of the risk spectrum.

Cash value that accumulates inside an IUL insurance policy grows tax-deferred. You can borrow against this cash value if necessary, though any loans left unpaid at the time you pass away are deducted from the death benefit.

What Is a 401(k)?

A 401(k) is a type of qualified retirement plan that allows you to set money aside for retirement on a tax-advantaged basis. Contributions are deducted from your paychecks via a salary deferral. Your employer can also offer a matching contribution. The IRS limits the amount you can and your employer can contribute each year.

With a traditional 401(k), contributions are made using pre-tax dollars. Any money you contribute is automatically deducted from your taxable income from the year. When you begin taking money out of your 401(k) in retirement, you’ll pay ordinary income tax on withdrawals. Any withdrawals made before age 59.5 may be subject to a 10% early withdrawal penalty as well as income tax.

Traditional 401(k) plans allow you to invest in a variety of securities, including mutual funds and exchange-traded funds. Target-date funds are also a popular option. These funds automatically adjust your asset allocation based on your target retirement date.

There’s no death benefit component with a 401(k). This is money you save during your working years that you can tap into in retirement. Unless you’re still working with the same employer, you’re required to begin taking minimum distributions from a 401(k) beginning at age 72. Failing to do so can trigger a tax penalty equivalent to 50% of the amount you were required to withdraw.

IUL vs. 401(k): Which Is Better for Retirement Savings?

Indexed universal life insurance and 401(k) plans can both be used as investment tools for retirement. But there are some important differences to note. With IUL, returns are tied to the performance of an underlying index. If the index performs well, then your policy earns a higher interest rate. If the index underperforms, on the other hand, your returns may shrink. Your insurance company can also cap the rate of return credited to your account each year, regardless of how well the underlying index does. For instance, you may have a cap rate of 3% or 4% annually.

In a 401(k) plan, you have the option to invest in index mutual funds or ETFs but you’re not locked in to just those investments. You can also choose actively managed funds, target-date funds and other securities, based on your time frame for investing, goals and risk tolerance. Your rate of return is still tied to how well those investments perform but there’s no cap. So, if you invest in an index fund that goes up by 20%, you’ll see that reflected in your 401(k) balance.

A 401(k) also affords the advantage of an employer matching contribution. This is essentially free money you can use to grow retirement wealth. With an indexed universal life insurance policy, you’re responsible for paying all of the premium costs.

Another big difference between the two centers on tax treatment and withdrawals. With an indexed universal life insurance policy, you can borrow against the cash value at any time. You’ll pay no capital gains tax on loans and no penalties unless you surrender the policy completely or fail to repay what you borrow. Death benefits pass to your beneficiaries tax-free.

With a 401(k), you generally can’t tap into this money penalty-free before the age of 59.5, even in the case of a hardship withdrawal. You may be able to avoid a tax penalty if you’re withdrawing money for qualified medical expenses but you’d still owe income tax on the distribution. You could take out a 401(k) loan instead but that also has tax implications. If you separate from your employer with an outstanding loan balance and fail to repay the loan in full, the entire amount can be treated as a taxable distribution.

Qualified distributions in retirement are taxable at your regular income tax rate. And if you pass away with a balance in your 401(k), the beneficiary who inherits the money will have to pay taxes on it. Talking with a tax professional or your financial advisor can help you come up with a plan for managing tax liability efficiently both prior to retirement and after.

The Bottom Line

Indexed universal life insurance and a 401(k) plan can both help you build wealth for retirement but they aren’t necessarily interchangeable. If you have a 401(k) at work, this may be the first place to start when creating a retirement savings plan. You can then decide if IUL or another type of life insurance is needed to supplement your workplace savings as well as the money you’re investing an IRA or brokerage account.

Tips for Investing

  • When using a 401(k) to invest for retirement, pay close attention to fees. This includes the fees charged by the plan itself as well as the fees associated with individual investments. If a mutual fund has a higher expense ratio, for instance, consider whether that cost is justified by a consistently higher rate of return.
  • Consider talking with a financial advisor about how to maximize your 401(k) plan at work and whether indexed universal life insurance is something you need. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool makes it easy to get personalized recommendations for professionals in your local area in just minutes. If you’re ready, get started now.

Photo credit: ©iStock.com/yongyuan, ©iStock.com/kupicoo, ©iStock.com/Piotrekswat

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.

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You CAN Reach Retirement! Avoid These Top 5 Retirement Mistakes

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retirement mistakes

Wondering what retirement mistakes will ruin your retirement? Here are the biggest retirement mistakes we all make.

Have you ever checked in to see if you are on track for retirement? I know this can feel like a daunting task, but preparing yourself for retirement can help you save more and avoid common retirement mistakes.

For some, retirement means quitting their job after 40+ years, but it can also mean working towards early retirement, in your 20’s, 30’s, 40’s, and so on.

I know that’s not for the “average” American, but by avoiding some of the retirement mistakes I will talk about today, you can start preparing for retirement at any age.

Related: How To Save For Retirement

The thing about retirement is that sadly many out there are not saving enough money. In fact, according to Zacks Investment Research, 72% do not save enough for retirement each month.

Also, according to surveys done by Bankrate, 20% of people aren’t saving any money, and 61% of Americans have no idea what they will need to save for retirement.

These numbers are very alarming.

Saving money in general is an important thing to do, but if you don’t want to work for the rest of your life, saving for retirement should be something that you are thinking about. And, I believe that saving for retirement is possible if you start working towards it and avoid retirement mistakes when it comes to planning and saving.

While many believe the economy ruins their chances for retirement, in reality most retirement mistakes come from specific beliefs people have about retirement. Some of these beliefs come from expectations of what their budget will be during retirement, that they can rely on their pension or social security, and more.

There are many reasons for why a person might not be saving for retirement, and by looking at the various retirement mistakes you might be making, I feel that more people can be aware of and overcome their retirement preparation problems.

Here are five retirement mistakes and how they might be hurting your chances for retirement:

1. You ignore saving for retirement altogether.

Many people skip out on saving for retirement for several reasons, including:

  • Believing you don’t have enough money to save for retirement.
  • Thinking that you’re too young to care about retirement or that it’s too late to start.
  • Relying too much on pensions and social security.

No matter how young or how old you are, you should be saving and preparing for retirement. You never know when you will need it, and I am all for a person being in charge of their own retirement plan instead of relying too much on other sources of retirement (such as relying on social security 100%).

Millennials are especially at risk and according to an article by Business Insider, a shocking 40% of millennials have nothing saved for retirement. This is a scary number because these people will all have to retire one day and I’m not sure what they will do when the time comes.

But, it isn’t just young people who aren’t saving for retirement. Bankrate found that only 60% of people aged 45-54 have some type of retirement savings. You can read more crazy retirement statistics here.

It is important to realize that part of the reason for these low savings rates is that many are currently living paycheck to paycheck, which makes it hard to even approach saving for retirement. Fortunately, you can start investing with very little money, and you can learn how to start investing for beginners if you are wanting to start planning for retirement.

There is never a bad time to start saving for retirement, and you can correct this retirement mistake by starting today.

Side note: I highly recommend that you check out Personal Capital if you are interested in gaining control of your financial situation. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation. You can connect your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. And, it’s FREE!

2. You take on debt for others and don’t think about your future.

I talked about this topic in the post Should I Ruin My Retirement By Helping My Child Through College? This is a hard thing for a lot of parents especially as student loans are out of control, and I am hearing from parents nearly every week saying that they cannot afford to retire because they are paying for their child to go to college.

If this is your situation, I want you to STOP making this one of your retirement mistakes. Unless you are on track for retirement, I honestly think you need to seriously start prioritizing your future. Your child will be fine without your monetary support.

There are lots of ways to support your child through school that don’t involve leveraging your future for their education. You can help them find a job, find scholarships, be an emotional support, and more.

You can take out loans for college, but you cannot take out loans for retirement.

3. You think you’ll never have to retire.

Recently, I read an article about someone who made hundreds of thousands of dollars a year, had a monthly budget of around $30,000 (yes, MONTHLY!), and yet hardly saved anything. This person said they didn’t really feel the need to save for retirement because they enjoyed their job so much. That’s just crazy!

See, even wealthy people make retirement mistakes.

Assuming you will love your job forever can be a huge mistake. While it’s great that you love your job now, it’s hard to judge what you will love decades down the line.

Also, you never know if something will come up in the future that will completely prevent you from working, such as a medical issue or some sort of major life change. Beyond realizing that you will need to prepare for retirement, an emergency fund should be something you already have or are working on – emergency funds are there to protect you from the what-ifs.

Related articles:

4. You miscalculate how much money you’ll spend in retirement.

For some reason, many people just assume they will spend less money in retirement, but that is not always the case.

While you might find some ways to save money on things like commuting expenses, work clothes, lunch if you weren’t bringing it, you will probably experience a very similar budget to the one you had while working.

You are still going to spend money on housing (even if you pay off your home completely, you will still need to pay property taxes, utility bills, etc.), food, clothing, entertainment, and so on.

Many retirees also take up new hobbies or activities. And, some retirees just have more time to pursue things they’ve already been doing, which can add up to a lot of extra expenses.

Plus, medical expenses may come up, you might decide to travel more, and like I said, the truth is that retirement spending is not usually much different than what you are currently spending.

Some make plans to become super frugal after they enter retirement, but life doesn’t always work out so perfectly. To make sure this isn’t one of the retirement mistakes you are making, I recommend starting to cut down your budget now.

By living frugally before you retire, you will be able to save more, will have less expenses going into retirement (the less money you spend, the less you need in the future), and you might even reach retirement sooner. Really, if you cut your spending now and become more frugal, you will be used to living with less. I’ve been living a more frugal and minimalist lifestyle since we moved onto our boat, and it can be a life changing thing.

5. You use your retirement funds for expenses other than retirement.

This is one of the worst money mistakes out there, and unfortunately many young people are making it. I’ve actually heard far too many stories about people taking money out of their retirement funds in order to pay for a vacation, a timeshare, pay off low interest debt, and more.

When preparing for retirement, this is a HUGE mistake.

While I don’t know everything about taking money out of retirement funds, I do know that this can usually hurt you more in the long run. Taking funds out of a retirement account can lead to large penalties and paying extra towards taxes.

The other thing about saving for retirement is that the longer you have funds invested, the more you will have for retirement. Compound interest is a powerful thing, and if you are taking money out of your retirement account it means that you don’t get the full benefit of it.

You should always just use your retirement funds purely for retirement. If you are struggling with debt or need help differentiating between wants and needs, it’s time to make a change. Don’t wreck your future by making this huge retirement mistake.

What retirement mistakes have you seen? Do you think you will have enough money to retire and how are you preparing for retirement? What age do you expect to retire?

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How to Retire in Barbados: Costs, Visas and More

How to Retire in Barbados: Costs, Visas and More – SmartAsset

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An island in the West Indies, Barbados is a jewel of the Caribbean. Its turquoise waters and golden beaches are a perfect match to many people’s idealized days in the sun that they hope is waiting at the end of their working life. While this commonwealth country, where English is the official language, does have good reason to boast, you may wonder whether it’s right for you to retire in Barbados. Before contacting your financial planner to see if your finances are in order for the move, here are a few matters to consider first.

Cost of Living and Housing

Barbados’s cost of living tends to run a little higher than the U.S.’s on average, according to Numbeo, a cost-of-living database. At 12.24% above the U.S.’s average, without taking into account rent, the difference is not as significant as some other percentages found between the two.

For example, although Barbados has a higher cost of living, it has a much lower rent average. In comparison to the U.S., Barbados’s rent is generally 48.53% lower. You’ll find that renting is the cheaper way of living in Barbados, with a single-bedroom apartment in a city center at about $654.55. However, purchasing is a different story. At about $3,087.21 per square meter to buy an apartment in the same setting, it’s in the same price range as the U.S. There, it’s around $3,533.12 per square meter.

So, if you’re looking to stretch your retirement funds further, it makes more sense to pursue renting Barbados rather than purchasing a property.

Retire in Barbados – Visas and Residence Permit

For those who want to retire in Barbados, the process is relatively simple. Individuals over 60 with sufficient funds to support themselves can apply for immigrant status. After living in the country for five years, those people can then apply for permanent residence. You’ll have application and approval fees, in this case, $300 and $1,200, respectively.

Another option open to retirees is a special entry permit (SEP). This permit is offered to retired property owners and allows them to visit the island and leave as they please. The main requirements include owning Barbados real estate valued at $150,000 or higher and health insurance coverage. The latter’s value depends on the person’s age; below 50 has to have $350,000, and over 50 has to have $500,000 worth of coverage.

There are flat fees to cover for the SEP. It’s $5,000 for those below 50 and above 60 with $3,500 for those in between 50 and 60. Once you hit 60, this permit is indefinite, but you must renew it until then.

Retire in Barbados – Healthcare

Barbados enjoys a high standard of living and, thus, its people’s health is overall quite good. Its healthcare system is even viewed as among the best in the Caribbean. However, if you’re not a Bajan (as citizens of Barbados are sometimes called), you are not included under the island’s universal healthcare system. Therefore, if you’re an expat looking to retire in Barbados, you should ensure that you have private health insurance. Otherwise, numerous travelers and potential residents seek out the U.S. for treatment instead.

This outsourcing is also partially due to the difficulty in accessing professional care, such as rehab services. Otherwise, you’ll generally find four types of institutions: hospitals, both private and public; polyclinics; alternative healthcare clinics; and somewhat specialized hospitals, such as the five geriatric hospitals on the island.

Retire in Barbados – Taxes

After you spend 182 days of one year in Barbados, you are considered a resident. So, it’s important to know the tax distinctions between resident and non-resident status. Residents must pay taxes on their worldwide income, or the income they earn both inside and outside Barbados. In contrast, non-residents only pay taxes on income earned in Barbados.

For residents, they must file their income taxes on a minimum threshold of BBD50,000, or approximately $24,786. Incomes up to and including BBD50,000 incurs a 12.5% tax rate, while going over that amount leads to 28.5%. Residents are ensured a basic personal allowance of BBD25,000 ($12,500) and BBD40,000 ($20,000) for pensioners older than 60.

Non-residents receive the same tax rates. However, it’s important to note that even if you live outside the country, you must file taxes with the U.S. as an expat as well. Barbados and the U.S. have a tax treaty that can offer benefits and help ease the burden. There are also opportunities for U.S. expats through the foreign earned income exclusion and foreign tax credits to avoid double taxation on their Barbados earned income.

Retire in Barbados – Safety

While U.S. expats are not specific targets of crime in Barbados, they are still susceptible to crimes of opportunity and violence. Theft, such as burglary and gun violence, among other crimes, exist in Barbados. So, it is essential to remain vigilant, to avoid walking alone, particularly at night, and to know who you’re with at all times.

In particular, the U.S. Department of State advises against traveling through specific areas on the island to avoid these dangerous interactions. Areas to avoid include Crab Hill, Nelson and Wellington Streets and general nighttime party cruises.

Be cautious about which activities you enjoy, such as water sports or tourist events. This advisement comes more from a practical, safety concern than a pointed targeting of tourists, though. So, keep your wits about you.

The Takeaway

Barbados is the island of dreams for some retirees. Thanks to the prominent U.S. community as well as an English-speaking citizenry, there’s less of a culture shock to shake you up. There is also the gorgeous weather, a location out of most hurricanes’ paths and the relative ease in becoming a resident. However, before you start to plan out your future on this island, it’s best to speak with a trusted financial advisor. Such a person can lay out the commonwealth’s tax and healthcare systems and help you determine whether the high purchasing price of property is in line with your long-term goals.

Tips for Achieving Your Retirement Goals

  • Finding the most suitable financial advisor for your needs doesn’t have to be complicated. SmartAsset’s free tool matches you with local financial advisors in as little as five minutes. If you’re ready to be matched with your financial advisor, who will help you achieve your financial goals, get started now.
  • Barbados may not have a high cost of living compared to the U.S., but the difference could still affect your finances. To see  if your finances will support this, try our retirement calculator. Just put in a few details about where you want to retire, when you want to retire and the value of your current savings.

Photo credit: ©iStock.com/Fyletto, ©iStock.com/isitsharp, ©iStock.com/zstockphotos

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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How to Retire in the Netherlands: Costs, Visas and More

How to Retire in the Netherlands – SmartAsset

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With just under 4,000 retired Americans getting Social Security benefits in the Netherlands at the end of 2019, this Western European country may not stand out as an obvious choice for retirement among some of its neighboring countries, but its high standard of living, universal health system and centuries of rich traditions, culture and food could make this the ideal retirement place for you.

If you want to retire in the Netherlands, a financial advisor can help you create a retirement plan to reach all of your goals and needs. 

Cost of Living and Housing

The cost of living database Numbeo says that consumer prices in the Netherlands are 9.9% higher than the U.S., when you exclude rent. And if you compare the overall cost of rent between both countries, American retirees can save a small amount — the Netherlands is 4.19% cheaper than in the U.S. But when you compare rents between specific cities, your Social Security dollars could go in some cases a lot further in this Western European country than in the U.S.

For a specific comparison, let’s take a look at Amsterdam, which has just over 1.1 million people. Average rent in the Dutch capital is 41% lower than in New York City. A one-bedroom apartment in Amsterdam’s city center averages $1,932.64, while a similar apartment in the Big Apple could cost you $3,269.65.

If you want to compare the average cost of rent in Amsterdam with other U.S. cities, the Dutch capital is 19.72% cheaper than in Los Angeles and 2.32% lower than Miami. However, Amsterdam rent is 3.54% higher than in Chicago, 41.80% higher than in Houston and 53.65% higher than in Phoenix.

So while the Netherlands may not be as affordable as other European countries, it may still be a reasonable choice depending on your financial options.

Retire in the Netherlands: Visas and Residence Permit

The Netherlands, like other European countries, is part of the Schengen Agreement, which means that American retirees are allowed visa-free entry into the Dutch country as tourists or for business purposes up to 90 days. If you plan on a longer residency, you will have to apply for a permit. Requirements will differ, depending on the reason for your stay. However, you should note the Netherlands has no specific option for retirees. So your pension income needs to be sustainable.

You can apply to the Immigration and Naturalisation Service (IND) for your residence permit once you have arrived in the Netherlands. In some cases, you will need a sponsor, such as an employer or partner, who will also need to submit an application (TEV). Once the IND approves your permit, it will be valid for up to five years.

Retire in the Netherlands: Healthcare

Universal healthcare is mandatory in the Netherlands — the country’s system makes health insurance compulsory for all residents, and expats are no exception to this rule. So American retirees who are permanent residents living in the Dutch country for more than three months will have to purchase private insurance. And to do so, you’ll need to register with your local council and receive a service number (BSN).

The basic insurance plan costs between $121 to $146 out of pocket, which will then become a monthly recurring payment. The government also reviews the mandatory deductible account and adjusts it yearly when needed. For example, in 2019, this amount was $493. In addition, consumers can pay a voluntary deductible on top of the mandatory payment in exchange for a lower monthly premium.

Retire in the Netherlands: Taxes

If you are earning money in the Netherlands, then that income is subject to taxes. Those employed by a company will have the amount automatically deducted from their salary through a wage tax. But if you are self-employed, you will have to calculate and pay your income tax on the annual tax return.

The Dutch tax office divides income tax into three categories based on income bracket, worldwide income, individual gross salary and pensionable age. Non-residents are only subject to a tax on the income they earn from sources in the Netherlands.

Beyond the Netherlands, you should keep in mind that American citizens are still required to file tax returns with the U.S. government, independently from where they reside. However, expatriates in the Netherlands could get some relief thanks to a tax treaty between both countries that eliminates double taxation. On top of that, expats can also benefit from the 30% ruling. This policy allows employers to pay their foreign-born workers 30% of their income tax-free continuing for up to 10 years.

Retire in the Netherlands: Safety

While the Netherlands can be picturesque from the windmills to the tulips, general safety precautions are advised, as in other countries, to safeguard against crimes that could target tourists and other expats.

The U.S. Department of State’s Travel Advisory says that the Netherlands is a low-crime threat, but puts the Dutch country at a Level 2 due to possible terrorism threats. The Netherlands raised its own threat level as well in 2019 and put forth counterterrorism measures to address the situation.

But while individuals are urged to exercise caution, the average traveler in the Dutch country has a generally safe experience, even in major cities like Amsterdam, Rotterdam and The Hague.

Bottom Line

While the high standard of living in the Netherlands could be challenging for budget-savvy retirees, the Dutch country’s universal health system and rich culture could make it the ideal retirement place for you.

Tips on Affording Retirement

  • If you want to retire in the Netherlands or any other country, a financial advisor can walk you through all the steps that you’ll need to take for a comfortable retirement abroad. SmartAsset’s free tool matches you with local financial advisors in your area within five minutes. If you’re ready to speak with an advisor that will help you hit your financial goals, get started now.
  • The Netherlands is one of the more challenging European nations to rely on your Social Security benefits alone. SmartAsset’s Social Security calculator can help estimate your benefit amount and compare it with the costs of living that you will have to pay during retirement.
  • Whether you want to retire comfortably abroad or in the U.S., both an IRA or a 401(k) plan will offer you tax benefits, and help you grow your retirement savings with compound interest.

Photo credit: ©iStock.com/Budanatr, ©iStock.com/Madkruben, ©iStock.com/Yasonya

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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How Is Early Retirement Even Possible?

What is considered an early retirement?

What is considered an early retirement?Early retirement has been extremely popular lately, and I’m sure you’ve been hearing about it a ton.

Between “Why I Hate the FIRE Movement,” says Suze Orman (from Afford Anything), Mr. Money Mustache, and any of the other amazing FIRE blogs, early retirement has been in the news a lot lately.

And, I love it!

But, I know there are a lot of people who are confused or even skeptical of what early retirement is and whether or not it is a real thing.

First, if this is the first time you have heard of FIRE, it stands for Financial Independence, Retire Early, and it can mean a lot of things to different people. But, the basic idea is that you work towards financial independence– either having enough saved and/or enough passive income to cover your expenses. You can then choose whether or not you want to work.

That sounds pretty amazing to me!

For most people, though, retirement means something that only older people do after decades and decades of working at a full-time job. However, there are many out there who sadly aren’t saving enough money when preparing for retirement at the traditional retirement age of 65-67. And, as pensions become a thing of the past, saving for retirement will become even more important.

According to one survey, 56% Of Americans Have Less Than $10,000 Saved For Retirement. According to a different survey done by Bankrate, 36% of people in the U.S. have absolutely nothing saved for retirement.

Even though it’s obvious that there are many people out there who need to make saving for retirement a priority, there are lots of people criticizing those who are making it a goal to retire early.

I see this a lot when I read articles about people who have retired early. I always scroll down to the comments of these articles because I find it interesting to see what people have to say about early retirement. I probably shouldn’t because I am always shocked, and saddened, when I read all of the negative comments.

People say that those who retire early won’t be prepared for emergencies and how boring it would be to retire early.

Really, what could feel better than working hard to your save money, investing it well, and then realizing the financial freedom you have to quit your day job so you can live your dream life!?

Whether you want to travel, continue working (Yes, you can continue working! There’s no rule that you have to quit all together.), spend more time with family, or whatever else, early retirement gives you the ability to choose your own future.

I have saved enough to retire whenever I would like. Yes, I earn a high income, but I also save a large part of my income and watch any wasteful spending.

And, don’t worry, I love my blog too much to retire anytime soon, but knowing that I can retire early just means that I am prepared for whatever might happen in the future. As you know, I’m a worrier, and I would much rather be safe than sorry. There are so many what ifs, like there could be a medical emergency, the industry may change, I may change, and so on.

To me, having the ability to retire early is all about freedom and flexibility.

Plus, early retirement can happen at whatever age you want it to happen, as long as you are prepared! A lot of the big stories about early retirement are about people in their 30’s, but you can retire early at age 60, and that’s still awesome!

The point of early retirement is really about striving to better yourself financially. It means getting out of debt, spending less than you earn, and saving for the future.

There are a lot of amazing people who are doing extreme early retirement, like those in the FIRE movement (who I love!). I have heard of people who have sold all of their possessions and moved into a van so that they can retire early, but I know that isn’t for everyone.

Not all early retirement paths have to be that extreme, some can actually be quite normal. It’s just about getting rid of your debt, lowering your expenses (which will automatically happen when you get out of debt), spending less than you earn, and investing money for your future.

Many people can still live a normal life while they prepare for early retirement too. Planning for your future just starts with being realistic about your income and spending, then you can set whatever early retirement goal suits you from there.

Related content:

How is early retirement possible?

How to calculate the amount you will need to retire early.

Planning for early retirement means that you will have to very carefully consider all of your different expenses. For most early retirees, that starts by creating a budget that allows them to really know their expenses and save for them well into the future.

A person planning for early retirement is thinking about what ifs and emergencies as well. No one is going to have their calculations correct down to the penny, but you can factor in possible future expenses.

Still, many people don’t believe that early retirement is possible. There are lots who think that $1,000,000 – $5,000,000 isn’t enough to retire young, and that early retirees aren’t thinking about future expenses, when they really are.

I believe this has a lot to do with the fact that many people don’t understand compound interest and investing. Both of these things let your money work and grow for you, well into the future, meaning that an early retirees’ retirement funds are most likely going to grow and will cover annual expenses and emergencies.

Early retirees aren’t just multiplying their annual expenses by 25 and assuming that will be enough money for the rest of their life. They know how investments work, are staying diversified, and have backup plans if necessary.

When you save enough of your money and only live off of a designated percentage of your savings or invested income each year after you retire early, you will find that early retirement is possible.

Before throwing the whole idea out, you may want to see how you are prepared for retirement and how early retirement may be possible for you. 

Whenever I read an article about someone who retired early, I always scroll down to the comments because I find it interesting to see what people have to say about early retirement. After all, just a few years ago, I myself, didn't even know that retiring early was a thing. However, once I realized that people were doing it and living financially free lives - I knew I wanted it as well.

Retirement Calculator: https://networthify.com/calculator/earlyretirement

As you can see from the above:

  • With just a 1% savings rate, it would take you 98.9 working years until you reach retirement.
  • A 5% savings rate means that it would take you 66 working years to retire.
  • A 20% savings rate means that it would take you 37 working years to retire.
  • A 50% savings rate means that it would take you 17 working years to retire.
  • A 75% savings rate means that it would take you 7 working years to retire.

So, by saving more of your money, you are likely to retire sooner. Makes sense, right?

And, that’s what early retirees are doing! They have gotten out of debt and live off of less than they earn so that they can save at a much higher rate.

Related content: Do You Know Your Net Worth?

You’ll find plenty to do in early retirement.

I have heard from so many people that retiring early isn’t something they want because they’ll be too bored.

To be honest, I think this is just crazy!

If you are looking to retire early, you probably aren’t the type to just sit around all day. I mean, if that’s your plan for retirement, that’s totally fine because you get to choose. But, for many, early retirement still means working to some extent, while also having the freedom to spend your time pursuing your passion, traveling, spending more time with friends and family, and more.

With all the extra time you have after retiring early, you could volunteer, pursue a passion, find fun things to do, take up a hobby, and more.

Early retirees aren’t lazy and just looking for a way to escape the work world. I actually believe they are very hard workers, who want to live life on their own terms.

Heck, you could even continue working like many early retirees do, if that’s what you truly desire. Knowing you can retire early just gives you choices in case something changes in the future.

For me, if I chose to stop working one day, I could easily find time to fill my day. I could travel even more, go on more long hikes, be more fit, read more, learn more (I’ve been wanting to learn a new language), find a passion project, spend more time with friends and family, etc. The list is endless!

The average early retiree, that I know, has a very active and meaningful life.

You can still enjoy life while saving for early retirement.

I think this is one of the hardest things for people to understand about retiring early.

Just because you are saving for retirement doesn’t mean you are eating ramen noodles for breakfast, lunch, and dinner.

There are plenty of ways to have frugal fun, eat on a budget, and so on. You can even see the world, while you are saving for early retirement.

Remember, the best things in life are free. The outdoors, spending quality time with those you love, laughing, and more are all FREE.

When do you want to retire and when WILL you retire? What do you think of early retirement?

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Source: makingsenseofcents.com

How to Retire in South Africa: Costs, Visas and More

How to Retire in South Africa – SmartAsset

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Home to both lively landscapes and a highly diverse and fascinating culture, South Africa stands out as a place of opportunity for many potential retirees. Bask in a glowing sun while out on the golf course or relax in the shade on a beach. If you are a foodie or oenophile, you can enjoy this country’s culinary treats and excellent wines. Between all the things to do and see, this southernmost African nation, where English is widely spoken, can sound like a dream. So, if you’re considering how to retire in South Africa here are a few areas to look into first. A financial advisor can help you determine if your U.S.-based assets will cover expenses in the Rainbow Nation.

Cost of Living and Housing

A common draw for U.S. expats when selecting a country to settle down in is a low cost of living, and South Africa tends to suit that criteria. Generally, its cost of living is 41.77% lower than that in the U.S., with rent 60.88% lower on average as well.

According to Numbeo, one of the largest cost-of-living databases, these averages stay relatively consistent across the country’s most important cities. Whether you examine one of its three capital cities, Pretoria, Bloemfontein and Cape Town, or its most populated urban location, Johannesburg, both the average cost of living and rent remain low.

For example, Johannesburg’s cost to rent a one-bedroom apartment in a city center averages around $470.22, and the price to purchase an apartment, by foot, in the same location is $92.53. According to World Population Review, Johannesburg’s 2021 population sits around 5,926,668. A comparable city is the U.S.’s New York City with 8,622,357. The cost of living in comparison to New York is less than half at 54.59%. For example, the average single bedroom in New York City is $3,269.65 for rent and $1,515.09 per square foot to purchase.

So, if your ideal retirement location has lower-cost housing, regardless of whether you want to rent or buy property, South Africa may be a suitable location.

Retire in South Africa – Visas and Residence Permit

While South African does have a visa that foreign nationals can apply for in the hopes of retiring there, there is no set age range for such a visa. Anyone of any age can apply for the retired persons’ visa as long as they meet other requirements.

It’s important to note that none of these rules concern working in South Africa. Generally, to retire in a foreign country and obtain a retirement visa, work is barred from the applicant. They have to have a sustainable pension to support them instead. However, while you still must prove a set amount of assets or funds, you are free to work.

Retirees tend to take two routes when retiring in South Africa: a retired permit or an independent financial person permit. The main difference between the two is that the retired permit allows for a temporary residency basis. A retired visa for a temporary residence is valid for up to four years and asks for a minimum income per month or year to be proven. Similarly, a retired permit application for permanent status asks for an increased minimum monthly income. Still, it lasts forever as long as the holder visits South Africa once every three years.

Lastly, the independent permit requires a minimum net worth of about $800,000 at time of writing and fee of about $8,000 at time of writing, but it has the same lifespan as the retired permit.

Retire in South Africa – Healthcare

The majority of South Africa’s hospitals are public, which tend to be overcrowded and under-resourced. They often have issues you would expect from an overburdened staff, including a need for updated equipment.

Expats are more likely to find excellent healthcare through the country’s private hospitals and practitioners, which can mostly be found in major urban areas. There, you’ll find several well-established, nationwide hospital chains that offer a high standard of care. You also won’t run into the issue of non-English speaking staff at these hospitals. However, their services are expensive. While South Africa’s Bill of Rights demands healthcare for all, it is based on a sliding scale. Typically, expats are put into a category that forces them to pay for healthcare out of pocket, so it’s a better idea to have private health insurance.

Retire in South Africa – Taxes

South Africa experiences extreme income inequality. The Gini coefficient, the standard index to measure inequality, of the country is 0.58 – one of, if not the, highest among any nation. South Africa, as a result of this and historical instability, is only just beginning to recover. However, because of this wealth disparity, personal income tax and most forms of revenue are only collected from a small percentage of the population.

South Africa’s personal income tax rates for residents are progressive and range from 18% to 45%, depending on your income bracket. Non-residents are only subject to taxes on income made from South African sources. The country defines a resident as someone present in the country for more than 91 days during the current and preceding five years.

It’s important to keep in mind that the U.S. requires all of its citizens to file taxes regardless of where they currently are in the world.

Retire in South Africa – Safety

The U.S. Department of State warns its citizens that South Africa is a location that experiences crime and civil unrest. More than the petty theft you may find in a travel advisory, South Africa experiences violent crimes, such as rape and mugging, which generally only occur at a higher frequency in central urban locations after dark. It’s also possible to find a demonstration or protest that has devolved into violence, disturbing the area and its traffic in the process.

On a lower level, some crimes, such as scams, also call for caution. It’s essential to be careful with your money, where you walk (especially at night) and keep your wits about you when interacting with things such as ATMs. Some are tampered with to obtain your cards and information.

The Takeaway

South Africa offers many potential benefits to the average retiree. It’s a naturally beautiful country that hosts a number of exciting sights and events to keep anyone entertained. Not only that, it’s a low-cost option in comparison to many countries and doesn’t put as many regulations in place for its retired foreign-born residents. There are legitimate safety concerns for the average tourist and a healthcare system that needs fine-tuning. Depending on your preferences for your retirement, the benefits may outweigh the difficulties or vice versa.

Tips for Achieving Your Retirement Goals

  • Finding the right financial advisor who can help you towards your goals shouldn’t be hard. SmartAsset’s free tool pairs you with financial advisors in your area in as little as five minutes. If you’re ready to be matched with your local advisor, get started now.
  • Retiring can come with all sorts of unexpected costs and obstacles. This is true even when you’re looking at a low cost of living country like South Africa. To prepare yourself, stop by our retirement calculator. All you have to do is input a few details about where you want to retire, when you want to retire and the value of your savings.

Photo credit: ©iStock.com/Byelikova_Oksana, ©iStock.com/ManoAfrica, ©iStock.com/Picture_Perfect

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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How to Retire in Poland: Costs, Visas and More

How to Retire in Poland: Costs, Visas and More – SmartAsset

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For those exploring a retirement abroad, Poland has plenty to offer the budget-savvy retiree. Poland is a relatively low-cost retirement destination when compared with some of its European nation neighbors, even in its capital, Warsaw. You’ll find that the country sits at centuries-old crossroads between Western and Eastern Europe, blending the best of their architectures, foods and cultures.

If you want to retire in Poland, speak to a financial advisor to help you reach your retirement goals and needs. 

Cost of Living and Housing

The cost-of-living database Numbeo says that consumer prices in Poland are roughly 41.53% more affordable than in the U.S., when you exclude rent. If you factor in rent, the cost of living in the eastern European country is 55.60% lower than in the U.S. This makes Poland an attractive destination for American retirees who are looking to cut spending and live off a pension comfortably.

For a specific comparison, let’s take a look at the Eastern European capital Warsaw, Poland’s most populous city. Rent in this capital is significantly lower than in New York City — 74.76% less. If you rent a one-bedroom apartment in Warsaw’s city center, you will pay approximately $772.02 each month. But if you rent a one-bedroom in New York City’s center, it will cost you roughly four times more — $3,269.65.

If you want to compare the cost of living in Warsaw with other big U.S. cities, consumer prices, including rent, are 53.38% lower than in Los Angeles, 47.57% lower than in Chicago, 32.81% lower than in Houston, and 31.73% lower than in Phoenix.

And if you are interested in comparing the cost of living in Warsaw with popular U.S. retirement cities, consumer prices, including rent, are 34.57% lower than in Orlando, 41.04% lower than in Tampa, 44.72% lower than in Charleston and 48.19% lower than Miami.

Poland has a lot to offer, especially if you’re looking for a cost-effective place to retire.

Retire in Poland: Visas and Residence Permit

U.S. citizens are allowed visa-free entry into Poland for up to 90 days. But to become a legal resident in the Eastern European country, you will have to contact a Polish consulate in the U.S. to apply for a temporary or flat residence permit. You may have to show proof of sufficient funds to support your stay, so make sure that all of your documentation is in order.

When your residency permit has been approved, you’ll receive a residency card that will help you find housing and pay your taxes. The first residence permit’s lifespan is only up to three years, but it can be renewed for longer periods.

Once you’ve lived in Poland for about five years, you will have the opportunity to pursue a permanent residence. This comes with two conditions: stable income and a property you either rent or own that you live in. Your permanent residence card then has to be renewed every 10 years.

Keep in mind that you will have to pay some base processing fees for your permit application, and they depend on the type. So, prepare to pay upwards of $120 for yours.

Retire in Poland: Healthcare

Article 68 in Poland’s constitution guarantees free medical care and hospital stay for all of its citizens. The eastern European country’s health service is financed through a national health fund, and American retirees could join that fund to get emergency care and coverage for pre-existing conditions.

Many Polish citizens use private insurance to supplement their public health care coverage. While Poland’s public facilities have more treatment options than their private health center counterparts, private insurance allows covered individuals to sometimes get medical appointments and treatments faster.

Expats will have to obtain a personal identification number (PESEL) before they can apply for public health insurance. And they should also consider looking into private medical insurance to get the most comprehensive coverage for their health needs.

Retire in Poland: Taxes

Like many European countries, Poland has different income tax regulations based on your residency status. Those who are naturalized are taxed on their worldwide income, whereas non-residents are only taxed on income earned from solely Polish sources. So, if your employer is not a Polish resident, you are not subject to the income tax.

However, you can expect to pay a flat-rate tax for approximately 20% of your revenue during the first 183 days of the tax year in Poland. After you have resided in the country longer than six months, you will be subject to the same progressive tax rates as a resident, ranging between 18% and 32%.

Note that even when you’ve paid your taxes accordingly to your residence status in Poland, you will still have to file a U.S. tax return.

Retire in Poland: Safety

The U.S. Department of State says that Poland has a low crime level. This implies that both citizens and foreign nationals can live and travel in the Eastern European country with relative safety. General precautions are advised, as in other countries, to avoid crimes that as infrequent as they may be could target tourists and other expats. You should also note that crime in Poland is still significantly lower than in the U.S., and the public healthcare system can be a valuable safety net for unexpected travel injuries and other physical accidents.

Bottom Line

Poland is one of Europe’s most affordable retirement destinations, and it keeps up with neighboring nations in healthcare and culture. Expats will find the Eastern European country both safe and comfortable, easy to travel in and one in which they can enjoy a slower pace of life while remaining very connected with nature.

Tips to Help You Afford Retirement

  • If you have the option to move abroad for retirement, a financial advisor can help you understand all the moving parts of relocation, including the tax implications. SmartAsset’s free tool matches you with local financial advisors in your area within 5 minutes. If you’re ready to speak with an advisor that will help you hit your financial goals, get started now.
  • You could comfortably retire in Poland, even in its capital, with the average Social Security income of $1,500 per month. For some, the value of your Social Security benefit can cover your cost of living depending on the area you settle in. Use SmartAsset’s Social Security calculator to estimate your benefit amount.
  • Whether you want to retire comfortably abroad or in the U.S., both an IRA or a 401(k) plan will offer you tax benefits, and help you grow your retirement savings with compound interest.

Photo credit: ©iStock.com/Marcus Lindstrom, ©iStock.com/udmurd_PL, ©iStock.com/PIKSEL

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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How to Retire in Finland: Costs, Visas and More

How to Retire in Finland: Costs, Visas and More – SmartAsset

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For those considering how to retire in Finland, you have one of Europe’s finest countries waiting to be explored. As of 2020, Finland topped Gallup’s World Happiness Report for the third consecutive year and that ranking comes with good reason. Known as the Land of a Thousand Lakes, this country has natural beauty that stands out among the rest. Finland boasts a strong economy and healthcare system for its residents, some three-quarters of whom can speak English.

A financial advisor can help you achieve your goal of retiring abroad.  

Cost of Living and Housing

While the cost of living in Finland is 8.36% higher than in the U.S., not all expenses are higher than in the U.S., according to Numbeo. The website also shows that the rent in Finland is significantly lower on average, 32.02%, than in the U.S.

A one-bedroom city center apartment’s rent in a highly populated city such as Helsinki can run about $1,171.77 month. Alternatively, the same-sized apartment can cost around $927.86 outside that central hub. The further you look outside urban areas for rental properties, the less expensive you’ll find them to be. When compared to costs of living in a city like New York City, rent may cost upwards of $2,650.00 inside the city center and $2,375.00 outside the city center.

If you are looking to retire in Finland or spend years there, it might be best to consider buying your own home. Interest rates on housing loans in Finland have been on a steady decline for years. Helsinki, the nation’s capital, has (at time of writing) the lowest mortgage interest rate in the eurozone.

Retire in Finland — Visas and Residence Permit

One of the main things to know about retiring abroad is getting a residence permit. The process is fairly straightforward. However, it has to be done on a personal basis; no one can apply for another person.

There are two types of residence permit categories: Temporary Residence Permits and Permanent (Extended) Residence Permits. You can get Permanent Residence after living in Finland with a permanent residence permit for four or more years. You should seek out an application for the permit from the Finnish embassy located in your country or the embassy of a Schengen country representing Finland. Also, you can apply using the Enter Finland online service to help book an appointment and begin the application process.

You will have to go through a background check to obtain your permit. You’ll also have to prove specific requirements down the line to become a Finnish citizen, such as fluency in the national language.

Retire in Finland — Healthcare 

The Finnish healthcare system focuses on preventing illnesses, in part through effective health and nutrition-focused education.  Before an expat can utilize Finnish healthcare benefits, however, they have to register for the National Health Insurance (NHI). You can only do this after four months of living or working in Finland. Once you register, you’ll receive a Kela card, which can be brought to pharmacies and clinics to help you get instant reimbursement for any payments. However, the amount paid back is decided on a case-by-case basis, which can underline the importance of private health insurance for some.

Each municipality is responsible for the healthcare of those living within its boundaries. Thus, doctors are responsible for a specific number of patients and create longer-lasting treatment relationships. Patients’ needs are addressed more quickly, and they work with a practitioner they know. Public hospitals can mean wait times, however, so some supplement with private healthcare as well.

Retire in Finland — Taxes 

A person’s liability to pay for Finnish tax is dependent on their residence status. After someone has stayed in Finland for six months or has a permanent home in the country, they’re deemed a resident. Finnish residents pay progressive income tax rates based on their total assessable income and the municipality they live in. These taxes are applied to their worldwide income, or money they make both inside and outside the country. Conversely, a non-resident is only taxed on income earned from sources in Finland and pays a flat 35% tax rate. Depending on the circumstances, a non-resident can apply to pay progressive tax rates instead.

Finland is a rare country that pursues double taxation treaties with foreign countries, providing some relief to people seeking dual citizenship.

Retire in Finland — Safety 

Finland is one of the safest countries, if not the safest, to travel in. The country even has one of the world’s, “most effective and trusted police forces,” according to the U.S Department of State. As with any country, you should be aware of the possibility of petty crimes such as pickpocketing, which tends to increase during the tourist season. However, other certain low-level crimes such as bicycle theft and car burglaries have been trending downwards since the early 2000s.

If anything should concern a newcomer, it’s Finland’s winter rather than its crime rates. The country experiences extreme levels of cold. In Helsinki during February, the average temperature ranges from 19 degrees F to 28 degrees F. So, travelers and visitors should prepare for the weather with appropriate clothing and research how to handle any snow or ice ahead of time.

The Takeaway

Finland is often seen as one of the best countries to retire in, especially for anyone who wants a safe, comfortable location to retire in. Those who love being surrounded by pristine nature will feel most at home here. However, harsh winters and a high cost of living can keep the more frugal retiree at bay. Your personal situation will decide if this haven of education and the midnight sun is the right place to spend your golden years.

Tips on Affording Retirement

  • Moving abroad takes more than financial stability. A financial advisor can work with you to break down all the necessary preparations, such as what to expect with tax implications. However, finding the right financial advisor for you doesn’t have to be hard. SmartAsset’s free tool only takes five minutes to match you with financial advisors in your area. If you’re ready to work with an advisor who will help you accomplish your financial goals, get started now.
  • Depending on the individual, one’s Social Security benefit’s value may be enough to cover these expenses. Using this Social Security calculator, you can estimate your benefit amount.

Photo credit: ©iStock.com/basiczto, ©iStock.com/Sasha_Suzi, ©iStock.com/ssiltane

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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