FIRE Seekers Grapple with Tax Optimization
12 posts across 5 communities in the last 90 days; 42% from r/fatFIRE.
“Hi all, Looking for some advice on a plan I'm considering, and what I might be missing. My situation: - Originally from the UK, currently living and working in Australia (Aus tax resident) - I've recently started investing in shares here in Australia - I plan to move back to the…”
“Yeah, I'd factor it in. $130k a year isn't a one-time number, it's a decision you're making every single year to live somewhere. If it's not buying you better schools, better infrastructure, better anything, that's not a tax bill, that's just waste. But separate the money fight…”
“For NZ it depends on how much of the wealth is taxable. You don't want to be logging a large capital gain while a NZ tax resident. The country is stunning and living in Queenstown 6mo of the year and somewhere the other half would be a dream for me. Don't worry too much about…”
Individuals pursuing Financial Independence, Retire Early (FIRE) are actively exploring strategies to minimize tax burdens, including considering relocation to countries with lower tax rates. This reflects a focus on maximizing savings and accelerating financial goals.
SOURCES (29)
“For NZ it depends on how much of the wealth is taxable. You don't want to be logging a large capital gain while a NZ tax resident. The country is stunning and living in Queenstown 6mo of the year and somewhere the other half would…”
“Record numbers of us are going to Aus. That says something whether you want to believe it or not. And as you well know, the healthcare system is terrible. Super is in trouble. You can pay for a dr privately but you still have to use public hospitals for emergencies and they have been struggling a long time. The country doesn’t have the infrastructure for the growth over the last 20 years and it’s made a lot of people very unhappy and now they blame everything on the elusive “rich”. It’s politica”
“I am fortunate to have French, NZ and US citizenship. Have not retired yet. Where would you live from a tax/money perspective? France seems pretty hard on the wealthy. NZ isn't quite as bad, but lots of talk about things changing and "eating the rich". The places I would like to live in the US are very expensive. Nicer places in and around Auckland also expensive which is somewhat mind blowing. After I transfer my assets, I'd be in the top percentages of wealth in NZ, but I'”
“Hi all, Looking for some advice on a plan I'm considering, and what I might be missing. My situation: - Originally from the UK, currently living and working in Australia (Aus tax resident) - I've recently started investing in shares here in Australia - I plan to move back to the UK at some point in the future The idea: Since I can't pay into an ISA myself while I'm non-UK resident, I'm thinking of gifting money to my parents (who live in the UK) so they can each open a Stocks”
“For most people, legally reducing their tax bill is not a matter of moving countries. That's what OP is talking about and that is the context of my comment. Don't let the tail wag the dog.”
“I would worry about making more income and moving to the right opportunities before worrying about progressive taxation.”
“Hi friends, I had a few questions on the logistics of accessing retirement money while living abroad, and I was hoping that people could help me by sharing their own experiences. 1. 72t or conversion ladder? Currently I am leaning more towards conversion ladder, since it seems to offer more flexibility. I am 32 yrs old so I think that would be a benefit, but the simplicity of 72t really speaks to me. What do you guys think? 1a. Just making sure I have the conversion ladder process correct . FIRS”
“Yeah, I'd factor it in. $130k a year isn't a one-time number, it's a decision you're making every single year to live somewhere. If it's not buying you better schools, better infrastructure, better anything, that's not a tax bill, that's just waste. But separate the money fight from the family fight. Your wife's not wrong that you can afford to live anywhere, that's just not the real question. The real question is why does the deal feel bad even though you can”
“Oregon has an oppressive 8.8% - 9.9% income tax rate and while social security is not taxed, all other retirement account distributions annually are taxed. Then there is the Death Tax with the lowest exemption of the 9 or so states still charging such a tax. Personally if one absolutely HAD to move to the area, I'd strongly suggest moving to the Vancouver/Clark County, WA side for no annual state income tax, pretty much the same cost of housing, food, fuel and a Death Tax exemption of $3MM t”
“Because it's not just a straight comparison of income tax rates. On the US side you also have to figure in FICA and what you pay for healthcare, which will probably be covered once you become a tax resident. And if you live in a state with an income tax, you need to take that into account as well. You also need to compare how progressive the rates are in each country. A higher marginal rate may not equate to a higher effective rate. Also, some of these countries are more LCOL for retirees be”
“How is it cheaper when you will end up in a higher bracket of that country's tax system ?”
“If your total cost of living over a year including tax is $45k, then yes it's $45k x 25 (or 30x or 20x or 33x or whatever, depending on a variety of factors). Your spending needs should cover every single dollar you spend in a year. As the other poster notes, there's a lot of possible variations in the exact mechanics of withdrawing money in retirement. Having 25x is just a rough ballpark to aim for when you're just starting out. Also make sure to run your tax assumptions through a t”
“What types of Australia assets are in the estate ? Is there an Australian Will ? Which state ? Does it refer to any type of trust being required / possible ? What's the plan with the funds in Australia ? Remain there or bring them into the US ? This will largely determine the on going tax compliance requirements. I assume that the assets are left to your wife solely ? Or are there other beneficiaries. Are they US tax resident ? In my view the Australian side is more complicated depending on”
“If I sell my house and go live more "nomadically", I'm theoretically setting myself for SOME degree of tax liability in every state I open my laptop in. Taxes are going to be the least of your concerns if you straight up do not have a physical residential street address to cite as your place of residence; everything is setup assuming you are living somewhere on a permanent basis. It's why the homeless have such a hard time picking themselves back up. As an aside, your company a”
“Mate, I feel the same way and am in the same position. The waste is horrendous and is done by both sides of government. If we stopped wasting money as a nation, we would be one of the richest nations in the world and everyone would benefit from that. To answer your question, for that type of saving, you could fly your family to see you overseas and still have money leftover. I say go for it.”
“We spend 1-2 months each year in Australia, and the rest of our time overseas (although not for tax reasons). If you were 50 like us (or in a few years time when the kids move out of home) then go for it unless you are UHNWI and don't care at all about the money. The skiing is better away from Australia, particularly during the Australian summer! However that isn't your situation. Maybe you can live overseas and spend $50k/yr giving the kids a vacation to come with you somewhere in the w”
“Nobody here can make this decision for you. Most people here always say no about things like this, but a lot of that is people coping with their own decision not to move to save on taxes. To take a page from what I think is a dumb investing trope here, "If you had the money today, would you buy that stock?" used to justify selling positions, I'd ask if you would pay $200,000 AUD a year to move to Australia.”
“NZ and Australia are closely aligned and many of us from the antipodes share the same concerns. So stop being a snotty jerk.”
“My thoughts exactly. Also if the person owns a property in Australia and earns an income from rentals I doubt they’ll break the residency status at all”
“Especially once you’re health suddenly leaves you. Having family nearby is crucial. But even before that, what is the point of spending your twilight years with strangers or without your family?”
“There is at least one major multi year participant here in their 70s that retired in their early 50s. The OP says the currently travel extensively. They know how they feel. The post is a tax residency "how much would you inconvenience yourself to save $200k?" question, not a travel question.”
“Throwaway account to protect our privacy. We're in our early 70s have the option of reducing our income tax by roughly A$200,000 per year for the rest of our lives by ceasing to be Australian tax residents and becoming tax residents of another country (for example, Switzerland, Monaco and others). In practice, that would mean spending at least six months each year outside Australia and establishing our lives elsewhere. A few points: We don't need the extra $200k. We're financially we”
“Hello - I’ve really tried to make this short but without success. I hope you’ll read it. I would love suggestions. Hello - I’ve read similar posts but nothing yet that addresses my unique situation so maybe y’all can help me find opportunities I haven’t yet thought of. We moved to another state 3 years ago when we retired. We are very young at heart, fit, and have many interests and hobbies. There are many reasons we chose here and we worked hard at considering factors. There are fabulous aspect”