jenninedinburgh

Hi there,

My husband and I are lucky enough to be citizens of both the USA and UK. As we get older, we are trying to decide which country (US OR UK) would be better for us financially for the long term. We're US expats living in the UK for quite a few years (me 10 him 16) and have therefore paid quite a bit in taxes over here. We are both in our very early 40s. As we look at the next 25 years, we cannot help but wonder where we'd be better off. I've done a spreadsheet to calculate how much we could save each year based on disposable income after our liabilities - it roughly works out to the same $ amount (that's working out the UK figure in USD - of course one cannot depend on currencies staying the same). So at today's currency rate between the US and UK, we're about even and neither country seems to be financially better for us than the other (I even worked out 2 holidays to the sun and one trip to the USA for the UK analysis and one European holiday a year for the USA analysis - given we'd both get about 10 days holiday in the USA and would not have much time to do anything else). I also accounted for running 2 cars in the USA with petrol costs and insurance. We don't have or need a car now in Edinburgh.

There are, I recognise, some considerable variables which we cannot account for - one huge one being healthcare. We're both professionals and with a US employer would probably have an 20% copay - but should something catastrophic happen and the max is reached, it's hard to tell if we'd have to use all our savings to cover it or if there is a max with the US employer's insurance.

What else might i consider? I know there are some tax write offs in the US that we may be privy to that we may not have here? Taxes in general are lower in the US - but that is probably offset both other things?

What are your thoughts? Some things I am interested in:

• Do you believe you are financially better off in the US (or not)? Why?
• Is it cheaper to raise a child in the US or UK (we planning to adopt in 2014)? Why or why not?
• What about investing money and/or saving? Better in one than the other? Any advantages or disadvantages to know about?

Any other thoughts?

Why are we even considering the USA? Well, we miss our families and the sun (we only speak English as well) - we did consider buying in Spain, but wonder if a move to the US and therefore leaving out the expenditure of travel to Spain and servicing another property could be invested instead by having sun in the USA as a part of every day life. We just aren't sure if there are hidden costs (such as healthcare) which could ruin our savings/investment aspirations.

Look forward to hearing from you.

J

robin1234

Two random and unrelated thoughts;

- Property tax (US) versus Council Tax. Property taxes can be very high, somewhere in the $5,000 to $15,000 range. Don't know about Edinburgh, but I believe Council Tax is less for most people. No doubt there are some places in the US where property taxes are very cheap and comparable with UK council tax.

- Retirement. If you go and work in the US now, or soon, you could probably build up a full Social Security record of years of contributions, assuming you already have several years already. While in the US, you could pay voluntary Class 2 contributions for UK NI. Then you'd end up with US SS and a British state pension. Wouldn't work if you stay in Britain, since you can't make voluntary contributions to US SS ...

- Retirement healthcare. In Britain, no premiums or co pays for NHS care. For over 65s in the US, budget $6,000 + per person for Medicare premiums and copays (and that is assuming you have qualified for Medicare Part A.)

jenninedinburgh

Thanks so much and very interesting thoughts - we've been thinking about this for a couple of years now and have recently sold a property in another part of the UK - which means we have a very distinct window now to make this decision before purchasing another - either here in Edinburgh or back in the USA.

Great point about property taxes - the council tax here for a £300K property we would consider is £2,338 and doing a search on Trulia shows about $7,117 for a $300k house we would consider living in one of the cities we'd like to move to.

I had no idea that we could pay class 2 contributions - that's really something to look into. Yes, you're correct, we have paid into the US system for several years before moving here - so that's a really good point.

Retirement healthcare - also a good point. Hard to say what it will look like in 25 years when we can retire - and it will be great that we can have the choice to live either place - for now though, we need to be able to invest as much as possible so that we have as much as possible at retirement....really difficult to tell whether one country will be better for us than the other however in that regard.

Thanks again - and very interesting point about the class 2 contribution. I'll look into that.

I guess something else to consider is paying income tax in the US on any earnings above $97K...that's about to happen to us for the first time (earning above the $97K) and just waiting to hear from the accountant how much that will be! If our incomes continue to grow, as we hope they will, that will also be something to consider that I did not in my original analysis.

robin1234

Not just that, but an advantage of living in the US is taxes are simple, because you just pay US and State tax (if any.). You don't have to pay a high price accountant to figure out taxes you have to file with a foreign country where you don't actually live (although you happen to be a citizen of.)

jenninedinburgh

Tru dat We pay a few hundred a year for an accountant to do the taxes each year.

Jerseygirl

We pay a few thousand a year for an accountant to do our US taxes.

Property taxes depend on the area you live. Property tax could be $20K in say the NY Met Area property taxes for a similar house in another area may only be a few thousand per year in another state.

As USCs have you been filing US income tax returns and FBAR each year?

robin1234

I'm thinking of going the other way, US to UK. I'm retired and don't want to die in this foreign field. However, the tax implications of filing US taxes until I actually DO die is not something I'm not looking forward to.

In terms of quality of life factors, think carefully about one thing you mentioned; less vacation allowance. I worked at a university, so had a couple of months off each year, but getting only a couple of weeks holidays a year must suck.

Pulaski

That is massively location dependent. Twelve years after I sold my 700sqft 2 bed (1½ really!) town house in London I am paying less (numbers of $/£) US property tax today than I paid council tax 12 years ago. Inflation adjusted, I suspect it would work out about half what I was paying back then. In other words I suspect that the council tax today on the house I owned in London is of the order of twice what my property tax bill is today.

Overall I think that the US v UK argument is going to be significantly affected by your income tax rate, and therefore on your income level. I found that the "compulsory" deductions from my salary in the UK (income tax and NI) were approximately 10% greater in the UK than in the US when including health insurance and contributions to my health savings account (HSA). I will repeat this because almost every time I say this several people quote what I posted and then ask, "Ah, but what about the [massive] cost of health insurance in the US?" I found that the aggregate deductions from my salary in the UK were about 10% more than the aggregate deductions, including the cost of health insurance, from my salary in the US. Furthermore all my out of pocket medical expenses including copays, deductibles, and non-covered charges, are more than covered funds in my HSA.

jenninedinburgh

Yes, every year

robin1234

Yeah but in London you had public services and such .. Police, fire brigade etc., .. Here in the boonies you have to look after yourself ...

Jerseygirl

jenninedinburgh

I kind of feel the same about the dying thing - I cannot imagine being buried so far away..kind of morbid I know, but I've actually thought about this. My husband could care less! Hubby would hopefully get to keep his from here as he would look to transfer with the multinational he works for (30 days). I am doing a PhD part-time and aspire to academia in the next couple of years (so hopefully will have the same joy in time off as you do).

Bluegrass Lass

Hi jenninedinburgh,

Thanks for starting this thread. I eagerly await the responses from the many members on the board. My husband and I have been having the same discussions. We are also in Edinburgh, btw. But we've been living most of our married life in the US, having only lived here for a few short months, and I am not a dual citizen (only US). We are not unhappy here, but are trying to work through where we want to be long term, and where is the most advantageous financially. It's not an easy decision by any means, trying to balance the practicality of finances with the emotional pull of family & friends.

Best of luck in your decision making.

Pulaski

That's a negative? I rather like it here, my overall quality of life is, IMO, much higher than when I lived in a tiny terraced house in London.

I was very concerned a few years back about the prospect of being forced, coerced, or financially bludgeoned into accepting public water and sewer service, and expected a sewer line to be laid down the side of my house to serve the rest of my street whether I liked it or not. Thankfully due to concerted action by more than 80% of the affected residents (and we're talking 1,700 people that would have been affected), the city withdrew their plan and retreated with their tails between their legs!

markonline1

I went from earning £60k a year with a £600 PCM mortgage and no dependants to earning $40k a year with a $1600 PCM mortgage and a 4 year old step daughter that costs $600 PCM in child care. So it's safe to say I'm financially a lot worse off in the States LOL. I'm better off in quality of life though so it's all good.