Nobody Warns Americans About This Before They Move Overseas

Most people think making the move overseas begins with buying a plane ticket.

That’s a dangerous mistake.

As someone who’s migrated between the US and South Africa several times over the years, I’ve come to a realization: Emigration is a process, not an event. And before you even step foot on the plane, you need to have yourself financially prepared.

The idea of moving overseas is increasingly appealing to many Americans. But the financial side takes more planning than many people realize… and the most important work must start long before the plane ticket is booked.

The two or three years before leaving is the critical period. This is the time to simplify finances, reduce complications, organize assets, and make sure life abroad won’t involve constant hassles with banks, taxes, insurance, or property back home.

The first thing future expats should do is inventory their finances and wealth. Most people have more moving parts than they realize: checking accounts, savings accounts, credit cards, brokerage accounts, retirement plans, insurance policies, subscriptions, automatic bill payments, mortgages, safe deposit boxes, and piles of paper records.

Your goal over the next few years should be simplification. Living abroad is easier when your finances are consolidated and easy to manage online. This may mean reducing the number of bank accounts, closing little-used credit cards, consolidating investment accounts, and ensuring everything can be accessed electronically.

But simplifying isn’t enough. It’s critical to know which financial institutions are friendly toward expat Americans. Not all are.

Some US banks and brokerage firms won’t serve foreign residents, even if they are US citizens. They may freeze accounts, suspend trading privileges, refuse to open new accounts, or even close accounts entirely if they find out that you’re living abroad. This problem has become more common in recent years because of reporting and compliance rules.

That’s why it makes sense to reorganise accounts proactively rather than waiting until after you’ve left. And remember, it’s not just about a friendly bank. A strong online banking setup is essential. You want reliable online access, strong fraud protection, and responsive customer service. International phone access matters too. If you are 12 hours ahead of your US bank’s business hours, you need to be able to speak to someone now, not in the dead of a foreign night.

The same is true of government institutions, like the Social Security Administration. For example, I just discovered a few weeks ago that you can’t log into your SSA account anymore from outside the US without using a VPN, so their website thinks you’re in the US. And private financial products can throw you curveballs too. When I returned to South Africa in 2022, I found out that the Quicken financial software I’d been using wouldn’t even allow me to log in from outside the United States, VPN be damned.

Given all that, you might be tempted to get rid of all your US banking relationships… but keeping at least one major US transaction account is critical. Social Security payments, pension income, tax refunds, and investment distributions generally work best through US banks. Unless you’re planning never to set foot in the US again, and plan to liquidate all your assets and connections there, you need one.

Credit cards deserve attention as well. In the years before leaving, identify which cards work well internationally and which charge expensive foreign transaction fees. And don’t forget that if you plan to transact with US businesses, like airlines, having a US credit card makes things much easier.

When it comes to the institutional side of finances, your US mailing address is a bigger issue than many realize. All financial institutions and government departments rely on mailing addresses for verification and security purposes. Most US financial institutions require a US address. Some expats, like me, use the US address of a trusted relative. Others use commercial mail drops—but be aware that some US banks will shut off access to your account if they find out that your address isn’t actually residential.

The same goes for cell phone numbers. Many US financial institutions have no provision to send one-time passwords and codes to a non-US number. Keeping a US cell number is ridiculously expensive though, so many folks sign up with a virtual text messaging service. But be aware that not all such services work… some banks won’t send messages to virtual numbers.

Retirement accounts need especially careful review. Legal custodianship of IRAs, Roth IRAs, and 401(k) accounts must remain in the US. But with a self-directed IRA, you can invest your retirement money outside the country. Whichever route you choose, make sure you understand how distributions will work once you’re overseas. And bear in mind that if you use the Foreign Earned Income Exclusion to reduce your taxable income, you may lose the right to contribute to a US retirement account.

Taxes are another area where preparation matters enormously. Even after moving abroad, US citizens still file annual federal tax returns. The smartest approach is to organize tax records well before leaving. You should digitize important documents, maintain organized records of investment cost basis, and make sure you can access tax forms electronically.

Whether to sell US real estate is a big decision. If you need the proceeds from a house sale to finance a property overseas, it’s important to start the process early so you can get the best possible price.

Many expats plan to keep the home and rent it out “just in case.” But as I’ve discovered myself, owning US real estate while living abroad can create ongoing stress and expense. Property taxes, maintenance, insurance claims, repairs, and tenant issues become much harder to manage from thousands of miles away.

Whichever route you choose, you’ll need to downsize possessions, make repairs, declutter, and time the sale for financial and tax reasons.

Insurance also deserves a full review. Policies of all types need adjustment once residency changes.

Finally, don’t forget about estate planning. As I’ve written elsewhere, the US estate and tax system is unique, and doesn’t apply in most foreign countries. Especially once you acquire foreign assets, you’ve got to have a solid estate plan in place. And because this involves different ways to own property, such as in a legal structure, you’ve got to start thinking about it long before you buy a home abroad.

The people who transition most smoothly to overseas retirement are rarely the wealthiest. They’re the folks who spent several years quietly preparing beforehand. That includes many of us here at International Living, including me. So, if you’re looking for support and advice on an overseas move, you’ve come to the right place. Sign up for my consultation service so I can walk you through the process step by step and introduce you to people who can simplify your financial life no matter where you live!