Project Description

Case Study: Retiring to the Mediterranean

HomeCase Study: Retiring to the Mediterranean

Sarah and Christopher…

were closing in on retirement and had aspirations to spend part of the year somewhere warm and sunny overseas, and part of the year near family. Avid travelers, the couple held financial assets in the United States and overseas, and Christopher holds dual-citizenship.

They had no issues with their finances over the years, and had a long-term relationship with a CPA who handled annual tax preparation, but had no knowledge of their investment portfolio.

When Sarah and Chris came to Passport Wealth Management (PWM), they had plans to wander through Mediterranean streets, explore vibrant downtown art galleries, and have the simple pleasure of meals by the sea. They were looking to answer one single question…

Could they achieve their dream of retiring part-time abroad in the next five years?

Step 1: Discovery

PWM spoke to the couple about their retirement dreams, goals for the future, and family. PWM collected information on their accounts, assets, liabilities, insurance coverage, philanthropic giving, and more – taking a comprehensive and holistic account of their financial history, lifestyle, and goals. They had taken investment steps to secure their financial future, but PWM identified several areas where the couple could benefit from professional advice to receive immediate value and long-term benefit.

Step 2: Identifying Liabilities

At the advice of their accountant, the couple held significant assets in retirement accounts which deferred the tax burden to retirement. Unfortunately, they had overfunded those retirement accounts, and inadvertently set themselves up to see a significant increase in their tax rate when they started to withdrawal from their retirement accounts. PWM recognized that recent legislative changes had created a window of opportunity to recognize taxes in these accounts in the near-term at a lower tax rate, and maintain a moderate tax rate into the future instead of seeing a significant increase several years down the line. PWM moved to recognize the income and pay additional taxes now, possibly saving the couple from an April 15th surprise down the road, and potentially a significant amount in future taxes owed. Familiarity with the various nuances and changes in the law allowed PWM to better position the couple’s finances for the future.

Step 3: Tax-Savings Strategy

Although their CPA had provided some suggestions for tax planning in the U.S., the couple had no guidance on managing their foreign pensions into their long-term tax and income plan. The income from the foreign pension, as well as the potential tax implications, became a critical component to their financial future, and thanks to the PWM team’s education and knowledge on global tax structures and professional network they were able to get competent answers to help build a stronger financial plan.

Step 4: Continued Tax Planning for Overseas Living

Recognizing that establishing residency in another country would have additional implications on the couple’s financial future, PWM continued to advise and support the couple on balancing U.S. tax planning and retirement planning, against the regulations for Christopher’s country of birth and the third country where they hoped to establish residency. Thanks to PWM’s international experience, the firm advised the couple on best practices to access and protect their money, insurance needs while aboard, and more to help the couple have the best opportunity to live their dream.

So, the question is, where are Sarah and Chris now?

Two years later, ahead of schedule, they are living overseas experiencing the sun, art, and food of the Mediterranean, with frequent trips stateside to see family knowing that Passport Wealth Management has their best interests at heart.

All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful. This is a hypothetical case study, not a statement of client experience.  The situation described above is reflective of the processes, views and opinions of Passport Wealth Management and does not reflect the opinion or testimonial of any particular client. 


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