Tag Archives: taxes

The Complicated Financial Life of a US to NZ Expat

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I recently gathered the information needed to file my New Zealand taxes. This was a multi-week task that required downloading documents from family financial accounts spanning three different continents. It was as exciting as it sounds, and if it were the only tax experience I had to endure each year, it would be bearable. However, as an expatriate (expat) US citizen, I must also file US taxes annually because the US is one of a handful of countries that taxes its citizens no matter where they live. An additional complication is that the New Zealand and US tax years do not match up. Hence, the information I gather for one regime is not complete for the other. All of this leads me to the conclusion that as an expat US military retiree family, we lead a complicated financial life.

Suppose you’re considering becoming an expat, expat retiree, or expat military retiree (like me). In that case, your financial life need not be as complicated as mine. Don’t get me wrong, if you want to be an expat, you are accepting a significant amount of financial friction in your life. However, I’ve logged below several engaging lessons learned from my complicated financial life that should help you navigate that process more efficiently. Those lessons include the importance of paying for expert tax advice, as well as finding a money tracking program that can access all your accounts in their various currencies. There are several more, all of which are worth considering before making that move. Continue reading →

The Pension Series (Part 31): Grumpus Maximization

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Pension Maximization Part Deux

This post is a direct continuation of Pension Series Part 30. In that article, I introduced my general framework for maximizing your defined benefit (DB) pension, which I call Grumpus Maximization. I also walked through the first two steps of Grumpus Maximization, which were (1) setting expectations and (2) orienting on yourself and your pension. These two steps are about understanding your retirement needs and your pension. In fact, step 2 required answering nine questions along those lines, not all of which were easy.

This article covers steps 3 through 5 of the Grumpus Maximization framework. As a preview, step 3 involves determining your Gap Number, which I discuss in detail below. Step 4 identifies tax minimization and investment maximization strategies that complement your pension’s steady earned income. Finally, step 5 discusses identifying other pension maximization opportunities. Continue reading →

18 Months of Kiwiarbitrage

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In my original Kiwiarbitrage article, I explained how I determined that my family and I could afford to “retire” to New Zealand (NZ). I also stated that I would write many more articles on New Zealand and geoarbitrage. Since then, I’ve written precisely none … until now!

This article starts with general lessons that any expatriate (EXPAT) pensioner should know before moving, some of which I didn’t. Secondly, since several readers contacted me over the past few months and asked what the cost of living in New Zealand is like, I discuss that below. The article is organized so people can read the sections they’re interested in and skip the rest. I also try not to concentrate too much on COVID-19 pandemic-specific lessons but rather lessons that apply to all environments.

Finally, this article is anything but definitive. There will be others. For instance, I want to write one for EXPAT US military retirees and veterans. However, I limited this article to just the general lessons I’ve learned from retiring overseas and cost of living insights for the sake of time. Continue reading →

Retirement Anxiety: How I Retired Mine

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Anxiety Check

Retirement anxiety

I think it will take more than this to calm me down.

How are your retirement anxiety levels at the moment? I must admit my levels were high earlier this week. As described in my previous post, I recently realized that I’m (probably) not going to make it to 21-years of military service. Thus, I’m (probably) going to retire after my pension vests at 20-years. This means that I won’t secure the transferability of my GI Bill to my kids prior to retiring. As a result, I’m leaving a lot of potential money on the table.

I spiked my anxiety levels even further this week by breaking the above news to Mrs. Grumpus. She doesn’t routinely read my blog. She’s too busy with the kids and running the household to find the time to read my 3500+ word tomes (i.e. articles). As a result, if I come to some major insight about my life while writing, I can’t rely on her to read about it. This means I actually have to talk to her. Unfortunately, I’m a much better writer than a talker, so I usually make a mess of the conversation. Continue reading →

The Pension Series (Part 16): VA Disability

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Friendship Is Rare

Does anyone have a friend that dates back to first grade? I don’t mean an acquaintance either. I mean someone that’s been there almost your entire life through thick and thin. Someone who is more like a brother or a sister than a friend. I’m happy to report that I got one. I’m also happy to report that he decided to write an article for my blog!

Now, I believe it’s good etiquette that people who host blogs introduce anyone who writes a guest post. In fact, that’s what Darrow Kirkpatrick did for me when I wrote Part 8 of the Pension Series for his blog. However, in this case, my friend interwove his story into the blog post. So instead of a long-winded introduction, I’ll simply say:

Here’s a great post on the tax benefits of VA disability from a best friend of mine that I’ve known since 1982!

Continue reading →

The Trade War Will Not Be Televised …

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… But, It Will Be Tweeted

Tariff by bloody tariff apparently.

Yes folks that’s right, despite all the talk of North Korean nukes, the Singapore summit, and “historic” de-nuclearization agreements reached (which were apparently the same as previous historic agreements); something far more sinister and much less subtle occurred recently — and I’m not talking about U.S. -sponsored human rights abuse committed along the U.S.-Mexico border either. No, I refer to the fact that U.S. President Donald Trump, and his team of economic advisors (and I use that term loosely), saw fit to consummate the trade war they’d been threatening since early 2018 … with the entire world!

Trade War

Why the entire world Mr. President?

In the last weeks of late-May and first weeks of early-June 2018, President Trump canceled all country-based exceptions to the 25% steel and 10% aluminum tariffs he imposed earlier in 2018. This move angered long-time allies and trading partners around the world including our North American Free Trade  (NAFTA) Partners Canada and Mexico; the European Union (EU); and other countries such as Brazil, Japan, and India. In retaliation, the EU  enacted counter-tariffs on U.S. imports; prompting further tariffs threats from President Trump on European cars. The EU also lodged an official complaint to the World Trade Organization (WTO), and Harley Davidson announced it is transferring some production to Europe to avoid the tariffs on its motorcycles sold in Europe. Continue reading →

The Pension Series (Part 10): Geoarbitrage and Pensions

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Where in the World …

geoarbitrage

… is Grumpus Maximus?

In Part 9 of the Pension Series a reader’s question prompted me to research the interplay between the U.S. Federal tax code and pensions. My reader, Mr. Yankee, wanted to know what options existed to minimize Federal taxes when pension payments started for him and his wife, Mrs. Doodle. I found a few specific instances to defray some Federal tax, but nothing major. Turns out Mr. Yankee already knew the most powerful tax options available to him. What did Mr. Yankee know? He knew that in the U.S., geography mattered when it came to taxes — specifically at the State level.

For my one non-related international reader, it may seem strange, but in the U.S. we tax income more than once. We typically tax it at the Federal and the State level, and sometimes even at the local level. Furthermore, pension payments typically count as income no matter the source. As I chronicled in Part 9 of the Pension Series, everyone who receives a pension is (typically) subjected to Federal tax. However, not every State in the Union taxes income. Nor does every State tax pension payments as income. Continue reading →

The Pension Series (Part 9): Pensions and U.S. Federal Taxes

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***This is an updated article. See Post Script at the bottom***

Today’s topic comes from one of my Facebook group followers.  I recently solicited my Golden Albatross group on subjects to research and write about, and Mr. Yankee responded with the following question:

Has there been discussion of how to shelter your pension benefits from federal tax? When I retire I expect to receive about $60,000 a year from my pension I’d hate to give a large portion of it back to the government.

I told Mr. Yankee I would look into it since I’d yet to conduct an in-depth analysis of pensions and taxes. It’s a bit premature considering the fact that U.S. tax law is undergoing its first major overhaul since the 1980s. Currently, the House and the Senate are working on reconciling their two different bills into one in order to approve and send to the President for signature. However, my research only shows one proposal in the House bill with the potential to impact this conversation in any meaningful way, and I believe I can address it appropriately. If something radical happens in the reconciliation process, I will simply update this article when the dust settles. Continue reading →