5 Surprises When Moving Abroad

After graduating from the University of Michigan with a BA in International Studies and Spanish, I decided to take a gap year and teach English as a Second Language (ESL) in Zhangjiajie, Hunan, China. It was an incredible experience that included playing on a local soccer team, being an actor in TV commercials, becoming fluent in Mandarin, and singing lots of KTV.  

While the 10 months living in China were great, this jaunt abroad didn’t fully prepare me for all the personal and financial complexities that come with moving abroad for a multi-year period and fully establishing residency in another jurisdiction. Below are five potential surprises that are good to be aware of pre-move!

1. Difficulty Sorting Personal Finances—It might come as a shock, but when you move abroad it is more difficult to access your financial information. Some custodians require you to utilize a VPN, others won’t work with a VPN, and some websites require you to access the info only during business hours (come on Social Security Administration…), among other issues. Moreover, some custodians will kick you off their platform if they find out you don’t live in the US. Lastly, there are certain tasks like getting life insurance or long-term care insurance that require you to be physically present in the US for completing the medical exam. Undertakings like this are best taken care of before moving.
2. Phone/2FA—While this is a subset of the first point, it is worth highlighting. One simple but often overlooked difference is that your phone plan likely won’t work when you move. If you do not receive texts while abroad, you also might not be able to access some of your financial accounts if Two-Factor Authentication (2FA) has been set-up utilizing domestic texts. In this case, it could be beneficial to port your phone to an electronic phone, get a virtual number beforehand, or change your 2FA to an email address.
3. Travel Insurance—When I first moved to Singapore, before each trip abroad, I would buy a travel insurance plan to ensure that I was covered in case an accident occurred while travelling. However, after my third or fourth time buying a single-trip plan on the MRT en route to Changi Airport, I decided to buy an annual plan to save me from having to do this each trip, even if it was less financially optimal. It is important to know exactly what countries and risks are covered in the policy, as most policies are ex-US and wouldn’t cover me on trips to see my family in Connecticut (It was a bit strange having to buy travel insurance to visit the US!). Lastly, if you engage in activities like skiing, wakeboarding, scuba diving, or the like, it is beneficial to ensure your policy covers adventure sports.
4. Foreign Currency Risk—This is especially important if you are paid in a foreign currency. Due to foreign exchange rate fluctuations between your original and resident country, you could be paid more or less than expected depending on the FX rate during the month/year. Also, if you are considering retiring in a specific country, it can be beneficial to accumulate that jurisdiction’s currency as it will be your future daily use money. Moreover, having investments denominated in that currency can be good to provide growth while mitigating foreign exchange risk. If you do not intend on staying in your current resident country long-term and consequently do not need its currency, you could convert it to your future use currency periodically.
5. Foreign Tax Rules—In most countries, after you spend a certain amount of time there, you become subject to its taxation. In many jurisdictions, if you spend more than 183 days (or half the year) there, you are considered a tax resident and all income, capital gains, dividends, and interest are subject to that country’s taxes. However, the rules differ depending on the nation. Clients we work with live around the world, and we have reviewed tax returns for Singapore, Australia, the UK, France, and Thailand, among others. While it might make sense that if you live in another country, you pay tax to them, it is something to keep in mind, particularly regarding estate-inheritance tax and retirement accounts, which may not be treated as tax-free or tax-deferred in your resident country.

For more questions on what to expect when moving abroad, please reach out to one of our wealth planners.

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