So you just got an offer for your dream job and they want you to move to Tokyo right away. Congratulations! But hold on just a moment! An international move is an enormous decision, and there are a few things you should consider before saying sayonara to your friends and family.
Housing
Is there housing?
Is it an apartment or a stipend?
Are furniture and appliances included?
What about utilities?
Is there an additional relocation allowance?
Let’s begin with one of the more obvious things to think about when preparing for life overseas: housing. This is going to be one of the biggest costs unless your company provides it. Many companies do provide housing, but be clear about whether that’s a housing stipend or an actual apartment. If it’s a monthly stipend, how do you receive it? Does it go to your paycheck? Or does the company pay your landlord directly? And is it enough to cover the rising cost of rents? How you receive this money is a very important detail, because if you find something cheaper than the base amount you receive, you can pocket the rest. Effectively, this could give you a raise.
Keep in mind that “fully furnished” may mean different things in different countries. In some places that means appliances are included, others may not even have an oven. A relocation or settling-in allowance may be provided for furnishings, but is it enough? The quality and costs of many goods can vary wildly, with some things being much cheaper than expected, and others much more expensive. Some countries have strict import laws or monopolies on local consumer goods. This drives up the cost and lowers the quality, especially for larger items like appliances and furniture.
Utility prices can also be unexpectedly expensive. Even when housing is provided, utilities may not be. Consider costs such as electricity, water, and Wi-Fi service. These costs may be much higher or even much lower than you are used to. Fortunately, this information can be found with a quick search online before you go.
Tax Consequences of an International Move
What taxes will come out of your salary?
What is the tax rate for goods in the country?
Are there any unusual tax laws to be aware of?
Most people know to look into the tax rate of their overseas salaries, however, many don’t think to check the taxes on goods like gasoline, food and beverage, and electronics. Furthermore, it’s important to be aware of tax exemption clauses in America. Some countries do not offer these exemptions, and others offer tax-free salaries for citizens who work overseas full-time. Be sure you read the fine print. To be subject to these tax laws, you must remain out of the country for the majority of the year, spending no more than 30 days in the United States annually. There are other country-specific laws that you should be aware of. Malaysia, for example, has a law about how much time expats must spend inside the country to qualify for their tax exemption rates. It’s jokingly known overseas as Malaysian tax jail. Check with your new coworkers before moving. Is there anything they wish they had known before leaving America?
Investments and Retirement
Are you receiving any retirement money?
Do you receive money at the end of your contract?
Make sure you have opened any long-term investment accounts before moving. For example, you cannot set up a Roth IRA account while you’re overseas. Many investment firms will not let you set up even a traditional IRA account at all; Fidelity is a notable exception. They’re one of the few firms that will allow long-term American expats to open an account while still working and living overseas. Even if you only have $100 to put into an account, setting it up before you leave will save you time, money, and frustration, especially if you don’t know how long you will be gone.
And you will want to put money aside for the future because you will be responsible for your retirement. Many companies will not have a full retirement fund, and if you are not paying US taxes, you’re lowering your contribution to Social Security. Some countries do force employers to put retirement money aside for all employees, regardless of nationality. When you leave, you’ll receive a check for all or part of that contribution. You still should have put more aside, but it’s a nice bonus at the end of your contract that you can use for relocation or other expenses. Therefore, when looking at your package, account for the money you should be putting aside for retirement, and budget for that before you even leave.
Healthcare
Is private health insurance provided?
What countries are included?
What is the local quality of healthcare?
What services and medicines are available?
The good news is that healthcare may be much cheaper in another country than it is in the United States. In fact, it almost certainly will be. However, you need to be aware of the availability and quality of care. Medical options may be limited in certain parts of the world. On the other hand, expensive procedures make be quicker and cheaper in other countries. Blood work and tests are often more thorough due to lower costs. Some countries have strong public health care services and insurance may not even be necessary. Either way, you’ll want to know if you can find doctors who can speak your language. Also, find out if the healthcare package through your employment covers healthcare in the United States since many places don’t. Is evacuation included if you are moving to a more remote, dangerous, or unstable location? What about other emergency services? Some countries have very limited ER hours. Finally, make sure that critical heart medicine you need is available in the country you’re moving to. If not, you’ll need to plan on (and worry about) stocking up with an annual supply before leaving.
Flights and Expenses Back Home
Should you sell your home and/or car?
Does your company provide flights?
If so, how often and for how many family members?
The longer you are overseas, the more you need to think about whether it makes sense to own a property, a car, or anything else in America. It might make sense. Some people make money by renting their house while they’re away, creating an extra investment opportunity. But an empty house isn’t doing you any good while you’re gone. Either way, come up with a plan before you leave.
Also consider the cost of storing, maintaining, and insuring a car if you’re remaining overseas longer term. Weigh the benefits and costs of owning against the price of renting a car for one month for your annual visit. Speaking of an annual visit, find out if your flights are included, and if so, how often? Some companies will pay for your flight overseas and your flight home at the end of the contract. Others won’t pay for either. Some pay for round-trip flights every single year, and still others will pay for you and all of your dependents. This can add up to thousands of dollars.
Final Thoughts for Your International Move
To paraphrase an old piece of advice, look before you leave. There is no way to account for every expense and possibility when moving to a new country. However, the more prepared you are, the better experience you´ll have on your exciting new adventure!
