The Key Ingredients for a Successful Move to Europe
Many Americans think moving abroad is only for the ultra-wealthy. But that’s not always the case. In fact, having wealth can make international moves more complex.
While ultra-wealthy households may absorb relocation costs and pay their way out of complicated tax and financial planning pitfalls, they’re typically tied to banking systems that don’t travel well internationally as a result of the Fair and Accurate Credit Transactions Act.
Larger portfolios, pre-existing estate planning structures and a diversified asset base that includes riskier holdings, such as cryptocurrency, also amplify potential tax exposure, reporting obligations and compliance risks.
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In fact, when compared with relatively modest nest eggs built on more traditional holdings, the advantages of the ultra-wealthy shrink, largely because their cases are expensive to manage even before the cross-border risk factor is introduced.
Financial planning for a move abroad
Any move abroad involves two key questions:
- Will moving abroad improve my financial and lifestyle outcomes?
- What factors might lead to additional risks?
Let’s examine a hypothetical scenario: Aurora is a healthy, single, 62-year-old U.S. citizen living in California who is considering retiring to Europe. She is specifically considering Portugal or France, but isn’t opposed to Italy or Spain because she’s enjoyed travels throughout all four countries. Her husband passed away two years ago, and she no longer feels as anchored to the U.S. as she once did.
Aurora has accumulated holdings across a standard IRA, Roth IRA and 401(k) totaling $2.5 million. She will be eligible to claim Social Security in five years. However, she is unsure if she can afford to move permanently and, if she can, how to financially plan for it.
Aurora’s profile suggests she’d be a great candidate for cross-border financial planning. The main information missing from her profile is related to qualitative factors we need to discuss before we can craft a financial plan that caters to her vision and absolves her of the stress associated with managing U.S. finances from abroad.
One of those factors is lifestyle. This can surprise people because how it relates to cross-border financial planning may not be immediately clear.
When Aurora talks to a cross-border financial planner, she’s surprised by some of their questions. They include:
- Which country or countries are you considering moving to?
- How do you envision your day-to-day life in Europe?
- Have you spent meaningful time in the place you imagine moving to, not including vacation time?
These questions matter because they shape every financial discussion that follows. When lifestyle expectations aren’t clear, financial planning becomes more difficult.
Taken together, someone with a lower net worth but clarity around their lifestyle goals will almost always be a better fit for cross-border financial planning than the $10 million client who lacks those attributes.
Other key factors for a successful move
Over time, several other factors emerge as more predictive of a successful move abroad than raw wealth:
- Planning runway. Having 12 to 18 months to prepare before moving makes a meaningful difference. It provides time to understand how a particular country’s tax treaty with the U.S. guides financial planning, and time to restructure accounts and avoid rushed decisions, particularly around state taxes.
- Alignment within a couple. Moves driven by one partner while the other remains hesitant means couples tend to struggle financially and emotionally.
- Children/timing. Families who want to move abroad with young children will need to take into account schooling, language integration and associated costs.
- Language. Fluency isn’t required, but a commitment to learning matters.
- Work. Many European visas don’t allow you to continue working. Plans that assume part-time work can jeopardize immigration status.
Choosing a country
It’s tempting to compare countries based on headline tax rates, Golden Visa immigration schemes or popular rankings. In reality, each destination introduces a different type of cross-border tax and financial planning risk.
- Portugal has been attractive for years, yet post-NHR transitions now require careful forward planning to avoid large Portuguese income tax hits.
- France is often predictable thanks to a beneficial tax treaty with the U.S. that streamlines investment management, although in the past year there have been proposed changes relating to wealth tax and Social Security contributions. Additionally, a U.S. inheritance plan must be carefully reviewed and often revised in the event of a move to France. In general, the system rewards planning and heavily penalizes improvisation.
- Italy can be appealing, but the timing of a move matters. Residency start dates, income flows and elections into special tax regimes must be intentionally aligned to mitigate potential cross-border tax hits.
- Spain is an increasingly popular retirement country for Americans. But it tends to introduce higher compliance and reporting friction, particularly around assets held abroad. It also has wealth and solidarity tax considerations, which vary depending on which region you plan to move to.
Ultimately, the right choice depends on income sources, flexibility and how much uncertainty someone is willing to tolerate.
To see how different countries tax retirement income, you can check out this chart from Rook International CPAs & Advisors. You should review your particular situation with cross-border tax and financial planning professionals specializing in your target country to fully understand all the considerations.
It should also be mentioned that this refers to the taxation by each country. In most cases, the exempt income must still be reported on the foreign tax return.
Healthcare: One of the most powerful planning variables
Healthcare is often one of the first costs to decline after moving abroad. For many Americans, this becomes a stabilizing force in the broader financial plan — in Europe, full-time, in-home care and full-service nursing homes can be affordable.
In Portugal, for example, retirement home options generally start at around $20,000 a year, with in-home care varying widely depending on the amount of care required.
Lower and more predictable healthcare costs can free up resources for housing, travel or simply peace of mind. Healthcare planning abroad often reassures people that the move is not only feasible, but sustainable.
The bottom line
U.S. retirees with a healthy-but-not-ultra-wealthy nest egg of around $2 to $ 5 million have:
- Enough flexibility to plan properly before moving
- Spending patterns that are comfortable but not volatile
- Wealth accumulated through decades of work and disciplined investing, rather than complex entities or family offices
However, international relocation rewards adaptability and patience. Those who are unable or unwilling to practice those traits may find themselves feeling unstable or unhappy, even if their cross-border financial planning is sound.
