I’ll Retire With a Military Pension and Want to Move to a Bicycle-Friendly, Beer-Loving Place—So Where Should I Go?

Dear MarketWatch,

I have five years until I retire. I have a nest egg of $1 million and will also have a monthly military pension of approximately $6,000, and Social Security on top of that.

I like cycling 60 miles a day and want to retire in a place that is known for good, safe cycling. I hate hot humid weather and don’t want a lot of snow. I love craft beer. And I would prefer a place with limited or no income tax on a military pension.

Where should I retire? Fort Collins, Colorado, and Asheville, N.C., seem like good places, but the cost of living in Fort Collins seems above average, and I am told Asheville has a lack of housing.

What other places should I consider and how do they compare with the two locations already mentioned? My wife likes the sound of “the Hill County in Texas,” but she knows the heat is bad.

Charles

Dear Charles,

The Fort Collins and Asheville areas sound lovely. And popular places tend to be more expensive — that’s just the reality of supply and demand. If that’s where you want to be, the trade-off might be as simple as a smaller house/condo/rental.

You also could seek cheaper housing a bit further from these two cities — Greeley, Colo. (don’t believe everything about the smell), or Hendersonville, N.C. (recommended here), for example. Or what about Raleigh-Durham, with the American Tobacco Trail as the trail network’s spine? You’d have to accept more humidity with that one, however.

I started my search by looking at the League of American Bicyclists’ bicycle-friendly communities. Five, including Fort Collins, are platinum. Housing in only one is cheaper than Fort Collins, but I don’t think you’ll appreciate the snow in Madison, Wis. I ruled out Davis, Calif., because the state is one of seven that taxes military retirement pay in full. (It doesn’t tax Social Security checks, though.)

So I looked further down the list while taking weather and taxes into consideration. You can estimate your state taxes using this calculator, but you may want to verify that with a tax professional.

I’ve described three suggestions for you below. Boise (a silver-level BFC) and Corvallis, Ore. (a gold BFC), recommended here and here, may be other places to consider.

As always, taxes, housing costs, the number of craft brewers and even bike-friendliness can change over the next five years. And some of these places may not mesh with whatever your wife’s wish list includes.

Another piece of advice: Be sure to experience a place in all weather, or at least the worst season, to make sure it’s a fit. Data can only tell you so much. Consider renting, at least at first. Your pension and Social Security may cover your regular expenses, but don’t make yourself house-poor.

Equally, state income taxes aren’t always everything. Virginia, which does tax retirement pay, is rated the best state for military retirees according to this survey and scores second-highest for the “economic environment,” behind Alabama.

Why not check out your shortlist on a bike tour?

A kayaker and a paddleboarder in Mead’s Quarry, part of the Ijams Nature Center in the South Knoxville section of Knoxville, TN.
A kayaker and a paddleboarder in Mead’s Quarry, part of the Ijams Nature Center in the South Knoxville section of Knoxville, TN.

Justin Fe/Visit Knoxville

Instead of Asheville … Knoxville, TN

Asheville is one of America’s premier craft beer destinations, but Knoxville has an above-average number of breweries too. By moving here, you’d get a city twice the size (nearly 190,000 people) and the state’s flagship university (33,000 students and the potential for practically free classes starting at age 65). You’d be in a valley with the Smoky Mountains visible to the east; Asheville’s elevation is more than 1,000 feet higher. Average July highs would be a couple of degrees warmer than in Asheville, and January highs would be a couple of degrees cooler, but a little less snow.

Knoxville is a bronze-level bike-friendly community, as is Asheville. Check out bike rides that tour the breweries. You can also join BikeWalk Knoxville on one of its rides to explore the city.

Tennessee has been reducing its state income tax and will abolish it at the end of 2020. North Carolina will give you a more modest break on your pension and tax your Social Security check.

Housing is much cheaper in Knoxville than in Asheville, whether buying or renting. Here’s what’s for sale in Knoxville now, using listings from Realtor.com (which, like MarketWatch, is owned by News Corp.

And here’s Asheville.

You can flip to the rental market for both.

———

A sunrise near Wenatchee, WA
A sunrise near Wenatchee, WA

Wenatchee Valley Chamber of Commerce

Instead of Fort Collins … Wenatchee Valley, WA

The Wenatchee Valley is a bronze-level bicycle-friendly area of 67,000 people in central Washington, so far from Fort Collins’ platinum status and even smaller than Asheville. The city of Wenatchee has nearly 35,000 residents, and the narrow, 50-mile-long Lake Chelan is an hour away. This is an agricultural area — fruit is a big crop, and there’s wine, too — so you should have plenty of rural roads to pedal on. Yes, you’ll also find craft brewers

Washington state doesn’t have an income tax, so Wenatchee checks that box. Colorado offers some tax breaks on both military pensions and Social Security.

The Wenatchee area is more affordable and less busy than Fort Collins, which you should think of as a cheaper(!) version of Boulder. Fort Collins has 170,000 people, plus there are almost another 80,00 in neighboring Loveland and 110,000 in Greeley. The plus side is that it gives you a broad range of neighborhoods and prices.

Average summer highs in Wenatchee are in the mid-80s; average highs in the winter are just above freezing. Fort Collins is a touch cooler in the summer and warmer in the winter. You’d get little rain, unlike cities on the other side of the Cascade Mountains, but expect 7 to 9 inches of snow on average in December and January. Despite its higher average temperatures, the snow starts earlier in Fort Collins, lasts longer and you get more of it.

You will find plenty of retirees around Wenatchee. Nearly 20% of Chelan County’s 77,000 residents are 65 or older, according to the Census Bureau. Fort Collins comes with Colorado State University.

If Wenatchee looks too pricey, check out Spokane, another bronze-level BFC. It’s far bigger, with about 225,000 people (and 525,000 in the county), and has more craft brewers. The drawback is more snow. If you want to go smaller, Ellensburg, about 90 minutes south of Wenatchee, is a silver-level BFC and a touch cheaper than Wenatchee.

Here’s what’s on the market in Chelan County.

This is what the housing market looks like in Fort Collins, Loveland and Greeley.

Indiana University's Little 500 bike race.
Indiana University’s Little 500 bike race.

Visit Bloomington

Wild card: Bloomington, IN

If you like older biking movies, you know this town of 85,000 people from “Breaking Away” and the Little 500 bike race. But did you know the home of Indiana University is a gold-level bike-friendly community?

And we’re not talking about just biking past miles and miles of corn fields on those 60-mile rides. (That would be retiring near rival Purdue University in West Lafayette, a bronze-level community.) Southern Indiana is hilly — test yourself on the brutal Hilly Hundred weekend ride outside of town during peak foliage. Others might prefer the all-terrain Gravel Grovel through the Hoosier National Forest. To chill, take the 9.2-mile trail that runs from the north end of town to the limestone quarry on the south side.

For beer, check out Upland Brewing, which won a gold medal at the Great American Beer Festival in 2019. Six more gold-medal winners are in Indianapolis an hour to the north.

Indiana is changing how it taxes military retirement pay; your pension should be exempt as of 2021. The state also doesn’t tax Social Security income.

Temperatures in Bloomington reach an average of 86 in July, while January means an average high of 37 and about 5 inches of snow. If you want to hang out on campus, seniors get 50% off tuition, and the break starts at age 60.

Here are homes on the market now.

Source: realtor.com

Should I Ruin My Retirement By Helping My Child Through College?

Should I Ruin My Retirement By Helping My Child Through College?

Should I Ruin My Retirement By Helping My Child Through College?Today’s topic will probably be a touchy one and it’s all about whether or not parents should start (or end) saving for children’s college expenses. Ever since I paid off my $38,000 worth of student loans last year, I have received many e-mails from parents who are interested in seeking help for their children.

These e-mails are all related to whether or not parents should risk or sometimes even ruin their retirement by helping their child pay for college.

There is usually one common theme in these e-mails – the parents are usually not on track for retirement, they have debt, or they cannot afford to help their child in college.

Here are some of the stories I have heard in these emails:

  • The parents have over $100,000 in student loans that they took out in THEIR name so their child could go to school. These parents are not on track for retirement and they have a lot of other debt besides student loans.
  • Their child is in medical school and the parents are paying for all of their college expenses plus food, car, rent, etc. These parents are not on track for retirement and they have debt.
  • Their child is in law school and the child said that if his/her parents don’t continue paying for their expenses, that they would hate their parents. This child was even more mad when the parents printed out every single blog post of mine and gave it to them (I did not tell their parents to do that, it was entirely their idea). The child said I was ruining his/her life (yup, that actually happened). These parents are not on track for retirement and they are afraid of losing their child now as well.

I know I’m not a parent.

I’m not a parenting or child expert either.

I know I don’t know what it is like to have a child and the feelings that go along with that. However, I do know that I raised my younger sister after my father passed away and her attending college did make me want to help her so that she wouldn’t have to worry about money as much.

The other day I was talking to my sister and she was bringing up different ways she could possibly side hustle so that she could make extra money. It sort of made me feel bad, and for a moment I thought about helping her financially. Luckily, she snapped me out of it and told “You’ve helped me enough already. Do not worry.”

Her saying that really made me happy. I actually had tears in my eyes!

Instead of just giving her money, I helped her with her budget, I have supported her, I helped her find side hustles so that she could make extra money, I helped her make a plan, and more.

I know all of these other things I am doing have shaped her into an awesome young lady. Yes, she has to learn things the hard way but in the end she will be just fine.

Quick note: If you are looking for information on college funding, I recommend attending the webinar 6 Steps To Quickly Secure Scholarships For College. Jocelyn Paonita Pearson, Founder of The Scholarship System, secured over $125,000 in scholarships and funding by following this system!

Alarming information about student loans.

According to the Federal Education Budget Project, around $100 billion was borrowed by students in fiscal 2014 alone. Also, the default rate on student loan debt averages around 13% to 14%. 90% of student loans in recent years are co-signed by others (mostly parents), and that is a big burden falling on parents.

That’s a lot of debt, and that’s a lot of debt that isn’t being paid for. If you are a parent cosigning on student loan debt, I hope you understand the consequences that can come from it.

Should parents help their children go to college?

Okay, before anyone thinks this is a post bashing all parents who help their children, I should say that I have no problem with parents helping their children pay to go to college. However, that’s AS LONG AS THE PARENTS CAN AFFORD IT.

I have plenty of friends who went to college where a lot of it was paid for by their parents. These parents could afford it, and that is key. If you are on track for retirement, you are not struggling, and so on, and you want to help your children attend college, then by all means go for it.

I also have plenty of friends who went to college where everything was paid for yet their parents clearly could not afford it. Some of these parents took on a second or even a third job so that their child could go to school. They racked up credit card debt and student loan debt as well. Some of these students never paid a cent towards their student loans and their parents were forced to in the end. They risked their retirements, their happiness and more. While I understand that these parents care for their children, they need to realize they are putting their retirements at risk.

Like Shannah said above in the tweet, you can take out loans for student loans, but you can’t for retirement.

When we have children, as long as we are on track for retirement then we will most likely help our children attend and afford college.

I know that my story is not the average story, but I went to college with no help at all. I paid for all three of my degrees on my own, lived on my own, worked full-time, paid for all of my food, and more, all starting just days after I turned 18 and graduated from high school.

It was tough, but I do think it is possible.

For other students, it may take longer to graduate, or it may take less, they may take on more debt, or they may take on less. Everyone’s story is different, but it does not mean it is not possible.

One great story I recently read was How I Graduated College With $100k… in Savings on Budgets Are Sexy. Many say my story is impossible, but just wait until you read this great story. You will be amazed at how awesome Will is! I’m jealous but I know he worked hard for his accomplishments.

How can parents help but not risk their retirement?

Instead of risking your retirement, you can do other things to help your child go to college. Below are some of my tips if you have children who are about to attend college:

You don’t need to help in every way possible. For some reason, there is this myth out there that helping your child go to college means you need to pay for everything for them. Instead of paying for their tuition, textbooks, food, dorm, car, and everything else, set limits. You might help by giving them emotional support, letting them stay in your home while they are in college, helping them find ways to save money for college, helping them cut their college expenses, and more.

Help them get a job. If you don’t have the money to help your child, you may want to help them find a job. This way they can pay for their own expenses. Just a little bit can go a long way.

Help them create a budget. If your child doesn’t have a budget, help them create one now. Read Does your budget suck? – Budget Categories. A budget can go a long way and help someone overcome many financial difficulties.

Related articles:

There are quite a few questions for you today, because I think this topic is an interesting one. I know that not everyone will have the same opinion so I want everyone to chime in! 🙂

Do you think parents should risk their retirement and pay for college? What if the parents are on track for retirement? How much should they help, if anything at all? Will you help your children go to college?

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Source: makingsenseofcents.com

Planning Retirement Distributions: Consider Opportunities and Trade‑offs

Here’s what to do as you transition from contributions to distributions.

For most of your working life you’ve been putting money into retirement savings. When you reach retirement age, you need to make a major shift and determine how to take money out of your savings. You’ll build a whole new vocabulary. Instead of trying to understand things like Roth vs. Traditional IRAs, you’ll need to begin thinking about things like required minimum distributions and the tax implications of qualified withdrawals.

Illustration of calculator, financial statement, and coffee cup

Start with a budget

Just as in your working days, when planning for post-career life it’s good to have a budget to understand what your retirement income and expenses will be. Build your budget with after-tax income. Many people incorrectly assume that all retirement income is tax-free. You generally won’t pay taxes on withdrawals from contributions you’ve made to Roth IRAs or other post-tax savings accounts, but you may pay taxes on amounts you withdraw from your tax-deferred 401(k), SIMPLE or Traditional IRA and even social security payments. The assumption is that your retirement income will be lower than your working income, so the taxes you’ll pay when you retire may be lower.

On the expense side of your budget, build in annual “cost of living” increases to match inflation. It’s also wise to plan for special considerations, such as:

  • Increases in health care costs. Health care costs in general are rising higher than other costs; as a retiree, you will get the double whammy of health care inflation and increased health care needs as you age.
  • Increases in leisure expenses. When you’re not working 40 or more hours a week, you’ll have that time free and you might find yourself spending more money. You’re likely to want to take more vacation trips to visit grandchildren or simply enjoy your retirement.
  • Changes in housing costs. Your mortgage may be paid, reducing monthly expenses, but you’ll still have ongoing maintenance, insurance and utilities costs.

Build a budget with a projection of your expected monthly retirement income and expenses and be sure to plan for a realistic life expectancy. If you’re 62 when you retire, you may live for another 30 or more years. Make sure your plan provides a comfortable living over your expected remaining lifetime.

How to manage retirement income

Think carefully about when to make withdrawals from your various retirement accounts so that you can minimize your retirement tax burden.

Although you may be retired from your job, you may still be earning income from real estate investments, financial investments, self-employment or other “non-job” income. If so, you may want to start drawing from your already-taxed savings (general savings and Roth IRA) to supplement this income as needed.

If your “non-job” pre-taxed income sources will decline over time, you may want to delay taking distributions on any tax-deferred vehicle (e.g. 401(k) and Traditional IRA) for as long as possible.

IRS rules

As with working income, the IRS has rules for retirement income. When it comes to social security, you can start taking withdrawals as soon as you reach age 62. However, if you delay your first withdrawals until later, your monthly payment may be higher.

Family and friends gathered together outdoors

With retirement accounts such as 401(k)s and most IRAs, you’re eligible to start taking distributions without penalty as soon as you reach age 59½. If you don’t need the money for your ordinary expenses, you can continue to earn interest on your savings by keeping it in your account until you need it.

You should work with a tax and financial planner to help make the best decision for yourself and your family so you can enjoy a long and happy retirement.

Source: discover.com

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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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.

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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 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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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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We Want a Diverse Area With Moderate Population, Warm, Beach and Culture—So Where Should We Retire?

Dear MarketWatch,

We are African-Americans and want to retire to a diverse area with moderate population, warm, beach, culture. We can afford a better-than-average lifestyle and want to feel accepted in our new community — hopefully somewhere with high walkability and homes with character. And maybe near a major airport…. for lots of traveling.

Let me know what you come up with. Thanks.

— Jennifer

Dear Jennifer,

We all know there are plenty of beach towns in the U.S., but finding one with personality is a bigger challenge.

I’m going to leave out some obvious places, like Miami Beach and, though less diverse, Hilton Head. On the West Coast, no Southern California. Too obvious. Plus, while you can afford a better-than average lifestyle, home prices there are so high that they could hamper your travel budget. The same goes for Sag Harbor and the Hamptons more broadly (plus you’d still have winter on Long Island).

Instead, I’ll look for some off-the-beaten path possibilities. I’m sure readers will have their own suggestions.

As always, explore the area in all seasons, and be realistic about the retirement budget. When you find your dream place, ask which areas are susceptible to flooding during hurricanes and other storms.

A street in the historic district of Wilmington, NC
A street in the historic district of Wilmington, NC

Courtesy Wilmington and Beaches Convention & Visitors Bureau

The Atlantic: Wilmington, North Carolina

Check out the Cape Fear region, which includes Wilmington as well as beach towns like Carolina Beach and the more upscale Wrightsville Beach.

Wilmington is growing quickly and at 123,000 people has more than half of New Hanover County’s population. The share of those 65 and older are roughly in line with the U.S. average. Look for a place where you’ll catch a breeze off the Intracoastal Waterway or the ocean to counter the summer humidity — so not too far inland.

You’ll have no shortage of cultural offerings, starting with Thalian Hall, the Cameron Art Museum and the Wilson Center. The University of North Carolina Wilmington, which has 17,000 students, lets those 65 and older audit classes for free, while its Osher Lifelong Learning Institute offers shorter courses to those 50 and older.

Be sure to explore the Gullah Geechee Cultural Heritage Corridor, which stretches from Wilmington to Jacksonville, Fla., and is home to cultural groups descended from enslaved peoples from West and Central Africa. Poplar Grove Plantation is one local site.

Winter days get into the 50s, with average lows in the 40s. Average highs in July are in the 80s.

Here’s what’s on the housing market now in Wilmington and in New Hanover County using Realtor.com (which, like MarketWatch, is owned by News Corp.).

As for travel, while Wilmington has an airport, you’ll have more choices flying from Raleigh two hours away.

———

Gulfport, FL, is next to St. Petersburg.
Gulfport, FL, is next to St. Petersburg.

Courtesy Visit St. Pete/Clearwater

The Gulf of Mexico: Gulfport, Florida

Florida’s popularity with retirees is no secret, in part because it’s affordable and has no state income tax. But all too often, home means living in a high rise or a gated community.

Gulfport, though, is described as how Key West was before it became overrun with tourists.

This town of 12,000, just west of St. Petersburg, is your artsy, funky, walkable spot in the middle of the Tampa Bay metro area and its 3 million people. You’ll also find plenty of retirees; 30% of Gulfport’s residents are 65 or older.

Gulfport comes with sunset views from its own (man-made) strip of sand over Boca Ciega Bay so, yes, it’s on the Gulf side of Florida but technically not on the Gulf of Mexico. But opposite the bay is St. Pete Beach, which gets raves from TripAdvisor (a local says head to the Pass-A-Grille section at the southern tip). When you tire of that, there are more white-sand beaches to sink your toes in, including Siesta Beach in Sarasota an hour south (and Dr. Beach’s pick in 2017 for best beach in the U.S.) as well as Caladesi Island State Park (No. 6 on Dr. Beach’s list this year) an hour north.

And if you just want to walk, don’t overlook the 45-mile Pinellas Trail that stretches from St. Petersburg to Tarpon Springs and goes through the northern edge of Gulfport.

For bigger getaways, there’s Tampa International Airport.

To get a sense of the local housing market, here’s what’s for sale now, again using Realtor.com.

As you explore the Tampa area, also check out Safety Harbor, a town of 18,000 on the western side of Tampa Bay with its own walkable downtown, and Dunedin (pronounced Duh-nee-din) north of Clearwater that’s also popular with retirees. You know there’s plenty of cultural offerings in a metro this size. One that might be easy to overlook: the Dr. Carter G. Woodson African-American Museum in St. Petersburg.

———

Overlooking Waikiki Beach
Overlooking Waikiki Beach

Christopher Ball/iStock

The Pacific: Oahu, Hawaii

If year-round pleasant weather is the priority, Hawaii can’t be beat. Average highs are in the 80s year-round, and average lows bottom out in the mid-60s. Of course there’s no shortage of beautiful beaches.

When you tire of water, take advantage of wonderful hiking opportunities. And while the focus of your international travels might shift toward Asia, you may want to spend more time just staying, discovering Hawaiian culture and exploring some of the national parks.

You admittedly won’t find a big population of African-Americans here, but Hawaiians have a much more open and fluid view of race and diversity than many of us on the mainland.

Start your search for your retirement life on Oahu Island. About a third of the island’s million residents live in Honolulu itself, one of the country’s most diverse and affluent cities and the birthplace of President Barack Obama. Curious about sites associated with him in some way? Here are even more.

You’ll find plenty of cultural offerings in Honolulu (including some of Hawaii’s best festivals, as voted by readers of Hawai’i Magazine), plus the state university (those 60 and older can audit classes for free).

There’s even Costco, if that’s your thing. Oh, and that Elvis statue…

Yes, there’s the cost of getting everything to Hawaii — some things will be even more expensive than parts of California. Here’s what the local housing market looks like.

If Honolulu is too pricey, consider some of the smaller towns on the island. Or check out the less-populated (and cheaper) Big Island, also known as Hawaii Island. Start with the Kalaoa area.

Source: realtor.com