I'm curious to hear what others are doing for retirement savings. I was looking at investing my money into a Roth or IRA; however, the money put into those accounts have to come from taxed income.
Currently, my money is just sitting in a savings account. I would like to get more interest on my money. What are my options?
The stock market intimidates me and I would have to have help investing in it. I really don't want to gamble with my savings, I just want to draw interest on it.
What are you doing with your retirement savings to get the most out of it?
Retirement Savings Options
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BobStrauss
- Posts: 34
- Joined: Sun Oct 03, 2010 11:16 am
Copied from my post in the USA taxes thread:
From what I have read, you can file for a ¨foreign income tax deduction¨instead of a foreign income exclusion. This way, your foreign earned income is not excluded, but every dollar you pay in foreign income taxes (restricted on a country-by-country basis) can be used as a tax deduction in the United States.
So if you pay more in foreign income taxes than you would in the USA, you still file taxes like you would back home, but owe nothing.
[b]The one advantage to this is that you can utilize retirement accounts such as Roth IRAs, which you wouldn´t be able to use otherwise.[/b]
You may be able to utilize health savings accounts to get tax-deferred savings advantages, depending on your insurance situation. Those have higher fees to deal with, however, as well as limited investment options.
Your best bet is probably to max out a Roth IRA and then dump the rest into a taxable account made of index funds. From what I´ve read, Vanguard is about as good as it gets when it comes to fees.
Here´s a well-rounded read on portfolio strategy, and what kind of BS not to fall for - http://www.amazon.com/Four-Pillars-Inve ... 0071385290
From what I have read, you can file for a ¨foreign income tax deduction¨instead of a foreign income exclusion. This way, your foreign earned income is not excluded, but every dollar you pay in foreign income taxes (restricted on a country-by-country basis) can be used as a tax deduction in the United States.
So if you pay more in foreign income taxes than you would in the USA, you still file taxes like you would back home, but owe nothing.
[b]The one advantage to this is that you can utilize retirement accounts such as Roth IRAs, which you wouldn´t be able to use otherwise.[/b]
You may be able to utilize health savings accounts to get tax-deferred savings advantages, depending on your insurance situation. Those have higher fees to deal with, however, as well as limited investment options.
Your best bet is probably to max out a Roth IRA and then dump the rest into a taxable account made of index funds. From what I´ve read, Vanguard is about as good as it gets when it comes to fees.
Here´s a well-rounded read on portfolio strategy, and what kind of BS not to fall for - http://www.amazon.com/Four-Pillars-Inve ... 0071385290
Thank you Bob!
Thanks for the reply Bob! I will look into that. However, what do you do when your salary is not taxed due to a tax treaty? Currently I do not pay any taxes due to a tax treaty. What are my options beyond a Roth or IRA?
Off Shore Banking
Thanks PsyGuy! Could you elaborate on one or two of those options? Maybe give the name of the countries or major bank branches you are speaking of? I would be happy to research more on my own.
Are you able to easily keep those accounts when your residency expires? What I have been told is that I cannot maintain a bank account when my residency expires. Also withdrawing/transferring large sums of money is difficult and there are significant charges.
I have looked into Swiss accounts as well. Those aren't necessarily secure, but seem to be the best of the lot. I don't know. I am hoping to learn more about this.
As far as EU accounts, which countries allow you to have bank accounts without EU residency? I went through hell to get my bank account when I lived there (and I had residency).
Right now it is looking like just putting my money into my US savings account is the best I can do.
I don't plan on staying here into retirement. I will probably move on to another country in the next 3-5(?) years.
Are you able to easily keep those accounts when your residency expires? What I have been told is that I cannot maintain a bank account when my residency expires. Also withdrawing/transferring large sums of money is difficult and there are significant charges.
I have looked into Swiss accounts as well. Those aren't necessarily secure, but seem to be the best of the lot. I don't know. I am hoping to learn more about this.
As far as EU accounts, which countries allow you to have bank accounts without EU residency? I went through hell to get my bank account when I lived there (and I had residency).
Right now it is looking like just putting my money into my US savings account is the best I can do.
I don't plan on staying here into retirement. I will probably move on to another country in the next 3-5(?) years.
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BobStrauss
- Posts: 34
- Joined: Sun Oct 03, 2010 11:16 am
Re: Off Shore Banking
[quote="Candycane"]Thanks PsyGuy! Could you elaborate on one or two of those options? Maybe give the name of the countries or major bank branches you are speaking of? I would be happy to research more on my own.
Are you able to easily keep those accounts when your residency expires? What I have been told is that I cannot maintain a bank account when my residency expires. Also withdrawing/transferring large sums of money is difficult and there are significant charges.
I have looked into Swiss accounts as well. Those aren't necessarily secure, but seem to be the best of the lot. I don't know. I am hoping to learn more about this.
As far as EU accounts, which countries allow you to have bank accounts without EU residency? I went through hell to get my bank account when I lived there (and I had residency).
Right now it is looking like just putting my money into my US savings account is the best I can do.
I don't plan on staying here into retirement. I will probably move on to another country in the next 3-5(?) years.[/quote]
First off, what is the tax treaty exactly? I've been under the impression that tax treaties between countries usually just forgive tax liabilities if taxes are paid in another country. Therefore, taxes are still paid, they are just exempted in the home country. If that is the case, you may still have the option to use the foreign tax deduction, allowing you to make IRA contributions.
Even if that's not the case, I definitely wouldn't park $$ in either Switzerland (very high fees, hassles w/US tax code) or in a simple US savings account (low rate of return, risk of inflation). If you can't take advantage of tax-deferred retirement vehicles like IRAs or 401ks, you're still better off dumping those funds into a taxable account - probably Vanguard for the lowest fees. A diversified portfolio of stock, bond, and REIT ETFs - as are discussed in the book I posted above - should be a [u]much [/u]better option than the other ideas you have listed.
(that is, if you are a US citizen)[/b][/i]
Are you able to easily keep those accounts when your residency expires? What I have been told is that I cannot maintain a bank account when my residency expires. Also withdrawing/transferring large sums of money is difficult and there are significant charges.
I have looked into Swiss accounts as well. Those aren't necessarily secure, but seem to be the best of the lot. I don't know. I am hoping to learn more about this.
As far as EU accounts, which countries allow you to have bank accounts without EU residency? I went through hell to get my bank account when I lived there (and I had residency).
Right now it is looking like just putting my money into my US savings account is the best I can do.
I don't plan on staying here into retirement. I will probably move on to another country in the next 3-5(?) years.[/quote]
First off, what is the tax treaty exactly? I've been under the impression that tax treaties between countries usually just forgive tax liabilities if taxes are paid in another country. Therefore, taxes are still paid, they are just exempted in the home country. If that is the case, you may still have the option to use the foreign tax deduction, allowing you to make IRA contributions.
Even if that's not the case, I definitely wouldn't park $$ in either Switzerland (very high fees, hassles w/US tax code) or in a simple US savings account (low rate of return, risk of inflation). If you can't take advantage of tax-deferred retirement vehicles like IRAs or 401ks, you're still better off dumping those funds into a taxable account - probably Vanguard for the lowest fees. A diversified portfolio of stock, bond, and REIT ETFs - as are discussed in the book I posted above - should be a [u]much [/u]better option than the other ideas you have listed.
(that is, if you are a US citizen)[/b][/i]