EXPATS AND THEIR FINANCES (new monthly feature) — Calling all Expats! It’s Time for a Check Up! — Coastal Expats Magazine

By Robert M. Ryerson

Whether you are an American retiree living in the States, or an American expat living in Ajijic, Mexico, Boquette, Panama, or Cuenca, Ecuador, it is a good time to have get a financial check up. Things have changed a lot over the past couple of years, and there may be more significant changes coming-to the economy and markets-and society at large.

Let’s look at a list of items that should be reviewed periodically in retirement anyway-and more urgently now in this rapidly changing environment:

⇒ Do you have enough income? Do you have too much money in cash equivalents at very low yields? By the same token, do you have too much money in accounts or vehicles with suspiciously high yields? If so, be careful. There is no free lunch in the world of fixed income and yields! Unfortunately, in the US markets, over the past 12 years, “safe” has meant accepting terribly low yields, and “productive” has implied needing to accept the risks of the stock market. There are solutions to this, and we will explore this important subject in a future column.

⇒ Do you have too much money in the stock market-including mutual funds or ETFs? Should you reduce your risk levels with the US markets up near all-time highs? Could you get through a crash that takes 5 ̶ 10 years to recover.

The US markets have been artificially “stimulated” and supported over the past 10 ̶ 12 years by the Federal Reserve, and its near 0% interest rate policies. The markets have not suffered any serious or sustained corrections in over 12 years. This is neither normal nor healthy. No one looks forward to a negative or down cycle, but they are natural and necessary for future growth to occur, and we are overdue at this point.

⇒ Have you taken any steps to protect your identity? Incredibly, in September of 2019, a database leak in Ecuador led to almost every citizen in the country having their personal data exposed online. It is imperative for all expats to have in place an identity theft plan that not only alerts them to potential breaches, but which offers professional restoration services that bring the identity back to pre-breach status.

⇒ Do you have proper and up-to-date estate planning documents in place? Depending on the country, expats need to be aware that their US documents may not be accepted or do what they want or need them to do in their chosen retirement country. New documents that comport with the governmental rules and regs of that nation must be in place and integrated into the overall estate plan. While this might seem complicated, or like an unnecessary expense, it is highly recommended. Things happen!

In future columns, we will look at the following important and timely “tune up” topics:

1.- How to counter the impact of inflation over time by getting at least a small portion of your liquid assets out of the dollar and into precious metals or cryptocurrencies.
2.- An introduction to cryptocurrencies and digital wallets-which we will all need to learn.
3.- Estate planning musts for expats in Panama, Mexico, Costa Rica, and Ecuador.
4.- Addressing long term care risks, costs, logistics, and non-financial consequences as American expats abroad.
5.- How to build safe yet productive income streams that increase over time, and last as long as you do.
6.- How to avoid market crashes without giving up opportunities for growth over time.
7.- How to use ROTH conversions to create tax-free income and tax-free legacies to loved ones.
8.- How to take advantage of today’s historically low tax rates before they expire on 12/31/25.

Originally published at https://expatsmags.com on October 22, 2021.