In 40s and no retirement [US ex-pat in Brazil]

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Jayzee
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In 40s and no retirement [US ex-pat in Brazil]

Post by Jayzee » Fri Nov 03, 2017 6:47 pm

Hello.

I feel ashamed that I am in the condition I am right now, but please don’t judge. I just need some advice, if you would be so kind.

I am almost 44 years old, a missionary to Brazil, and live off of some donations and through teaching English here on the side. I am married, and my three kids are almost grown up now (the oldest is in college here already).

Here is the problem. I opted out of social security (through the mission work) from the start, and I now have NO retirement! I had always planned on setting up some retirement plan, but life “happened” and I never managed to. (I know that is foolish, that’s why I asked not to judge me; I feel bad enough already.)

I do have a Suntrust bank account in the United States, and recently wrote them and asked about their ROTH IRA plans.

I received the following reply from the bank:
If this is concerning a Bank- Side IRA (Money market or CD), please contact the branch on account or [phone number]. If this is concerning an investment IRA, for your request, please call [phone number], option 3, to speak to a representative between the hours of 8am and 6pm eastern, Monday through Friday.
I have absolutely no idea what the difference is; and, to be honest, I don’t even know if this is the root I should be taking – at least to have some retirement in my older years (It could be after my 70s.)

Do you have any advice/suggestions for me? I’d really appreciate it!

frugalecon
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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by frugalecon » Fri Nov 03, 2017 7:06 pm

Jayzee wrote:
Fri Nov 03, 2017 6:47 pm
Hello.

I feel ashamed that I am in the condition I am right now, but please don’t judge. I just need some advice, if you would be so kind.

I am almost 44 years old, a missionary to Brazil, and live off of some donations and through teaching English here on the side. I am married, and my three kids are almost grown up now (the oldest is in college here already).

Here is the problem. I opted out of social security (through the mission work) from the start, and I now have NO retirement! I had always planned on setting up some retirement plan, but life “happened” and I never managed to. (I know that is foolish, that’s why I asked not to judge me; I feel bad enough already.)

I do have a Suntrust bank account in the United States, and recently wrote them and asked about their ROTH IRA plans.

I received the following reply from the bank:
If this is concerning a Bank- Side IRA (Money market or CD), please contact the branch on account or [phone number]. If this is concerning an investment IRA, for your request, please call [phone number], option 3, to speak to a representative between the hours of 8am and 6pm eastern, Monday through Friday.
I have absolutely no idea what the difference is; and, to be honest, I don’t even know if this is the root I should be taking – at least to have some retirement in my older years (It could be after my 70s.)

Do you have any advice/suggestions for me? I’d really appreciate it!
Jayzee,

It is great that you found your way here. That is an excellent first step, and you will get a lot of good advice. You are late relative to where a lot of people start, but that is water under the bridge, and getting started now will only put you in a better situation going forward.

If I were you, I would focus on a couple of things. First, educating yourself about the low cost options available at, e.g., Vanguard or Fidelity. Boring, low cost total stock market and total bond market funds. Start funding that kind of account, preferably in a tax-advantaged account to the degree possible. Second, make sure that you have some reserve for emergencies. Together these will go a long way.

I am sure others will weigh in as well, but I will just say that you are in better shape than a friend of mine, who kept putting it off through his forties, fifties, and into his sixties. When he lost his job then, he became destitute. You will be in far better shape to weather life’s storms.

Best,
FE

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LadyGeek
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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by LadyGeek » Fri Nov 03, 2017 7:19 pm

Welcome! Relax. You came to the right place.

First, an administrative comment: I retitled the thread to attract the attention of our experts. I assume you are a US citizen living in Brazil. If not, feel free to change the thread title by editing the Subject: line in Post #1.

To answer your question, the bank is offering CDs and Money market certificates (it's like a CD) that can be used as an investment in a Traditional IRA. Contact the branch for these.

If it's for a Roth IRA (a different type of IRA), call them, option 3, and speak to a rep.

============

When it comes to living outside the US, the IRS has a lot of complicated tax rules about retirement plans.

Please see this wiki page: Taxation as a US person living abroad - you've probably never seen this before. Don't worry about understanding it. I just wanted to show you how complicated this can get. (We can help you with this, don't worry.)

Due to the complicated IRS rules, the bank may not want to deal with someone living outside the US.

So, the first step is to understand how the IRS views your situation. Do you have dual-citizenship, or are you considered a US ex-pat (US citizen living abroad)? How about your wife and kids?

Do you have a permanent US address? Do you plan to return to the US at some point?

Do you have any investment accounts in Brazil?

=============

Please don't hesitate to ask questions, as the hardest questions to answer are the ones not asked.

If you don't understand something, by all means let us know and we'll try again.
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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by Dottie57 » Fri Nov 03, 2017 7:23 pm

Welcome!

Don't worry about the past. Focus on present and future. It is good to see you want to start now.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by gclancer » Fri Nov 03, 2017 7:24 pm

Giving you a bump, hopefully you’ll get lots of good advice. Since you don’t have a lot of savings to speak of I would recommend you use a Traditional IRA instead of a Roth IRA at least until your annual tax liability is $0 (research the Savers Credit, Eanred Income Credit, etc. to make sure you’re maximizing your tax refunds and then try to save the refunds).

Also, it doesn’t take a ton of covered work years to get a decent social security benefit. Set a Google alert for Congress offering an opportunity to opt back in to Social Security so that you can analyze your options if the time comes. https://www.ssa.gov/OP_Home%2Fhandbook/ ... -1130.html

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by denovo » Fri Nov 03, 2017 7:26 pm

Do you plan on moving back to the US? You can probably make more money in the U.S. than Brazil.
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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by tetractys » Fri Nov 03, 2017 7:36 pm

Well, with a steady job SS only takes 10 years to accumulate, so you can easily have that taken care of by the time you retire. 44 is a good time to start. -- Tet

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by in_reality » Fri Nov 03, 2017 8:35 pm

LadyGeek wrote:
Fri Nov 03, 2017 7:19 pm

To answer your question, the bank is offering CDs and Money market certificates (it's like a CD) that can be used as an investment in a Traditional IRA. Contact the branch for these.
Actually, I suspect the above can either be an IRA or a ROTH. The point is that it's a CD.

LadyGeek wrote:
Fri Nov 03, 2017 7:19 pm
If it's for a Roth IRA (a different type of IRA), call them, option 3, and speak to a rep.
Again, this could be either a traditional IRA or a ROTH. The investments here are more varied including stocks or bonds, ETFs, mutual funds (which expats usually can buy) and possible brokered CDs (CDs bought on a secondary market).

In either case, you need US taxable income to make a contribution. This means you must be declaring income from Brazil on your US tax return (and perhaps claiming a Foreign Tax Credit for Brazilian taxes on that same income).

In many cases, it's better to simply exclude your foreign income using the FEIE (Foreign Earned Income Exemption) and invest in a taxable account.

Jayzee
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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by Jayzee » Sat Nov 04, 2017 7:02 am

Thank you so much for your kind words of encouragement and advice, everyone! You were correct about my situation, LadyGeek! Thank you for retitling the thread!

Yes, I know it’s complicated being involved with two countries! To tell the truth, that is why I have always put it off (like an ostrich putting it head in the sand). To tell the truty, I have a hard time even understanding some of the advice here in the sense of where to sign up for this plan or that plan. That's why I began the process by writing to my U.S. bank, hoping they would have a simple plan, but even their answer was hard to understand. I'm not financially savvy.

Answering some questions:
1. I am American.
2. I will probably always live in Brazil.
3. I do earn some U.S. income through the mission (about US$ 2.000 a month).
4. I complement my income by teaching English, but I declare that extra income in Brazil through my wife (who is Brazilian), just because it is simpler that way.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by snackdog » Sat Nov 04, 2017 8:25 am

Do you or wife get the Brazilian FGTS? Is is similar to social security but paid by employer. You can cash out a lump sum under certain conditions. It can be a lot of money.

Jayzee
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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by Jayzee » Mon Nov 06, 2017 2:53 pm

My wife pays a Brazilian equivalente of social security as "self-employed", but it's not much to write home about. :-)

Alex GR
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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by Alex GR » Tue Nov 07, 2017 2:34 am

Don't worry - if you are saving money off of that $2500 or so income due to low cost of living in Brazil, you are better off than 80% of Americans who spend their entire paycheck on "living expenses" (big screen TVs, iPhones, luxury cars, mortgages they can't afford,etc.) :mrgreen:

I am an American but I've lived and worked overseas for many years. I was also concerned about this but it turned out to be a non-issue. Basically, nobody at the brokerage knew or cared that I was gone. The account is set to reinvest all proceeds. They don't send anything by mail, it's set to 100% paperless.

Regarding the IRA, I don't see how that comes into play in your situation but I would be curious to find out if an IRA is possible in your situation with no U.S.-based income. Perhaps a senior forum member can explain this? Traditional is probably out of the question because there's no U.S. employer from which you could contribute $5500 pre-tax. dollars. What about ROTH? Is there any reason for an expat to have it?

Since you make way less than $101k per year you won't pay taxes on your Brazilian income in the U.S. (foreign tax exclusion).

As far as the portfolio itself, the most common recommendation here is to keep it as simple as possible (Example: VTI 43%, VXUS 17%, BND 40%) but it depends on many factors and your individual situation.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by in_reality » Tue Nov 07, 2017 3:01 am

Times have changed and brokers are often very fussy about not having expat clients.

As far as IRAs go, American overseas globally have US taxable income. You must file if earning whatever the minimum is $20k or something I forgot.

Most expats exclude that income from US taxable income by using the FEIE (foreign earned income exclusion) which goes up to around $100k. Also, if you are over $100k, that amount over is also taxable to the US and can be used to contribute to tax deferred.

However, anyone can not do that (ie not exclude income under the FEIE) and pay US taxes on foreign income. This lets you contribute to an IRA or ROTH. Then you claim a tax credit for foreign taxes you paid on that income to reduce your US taxes. It generally only works if the foreign tax rate is higher than the US one.

The other thing is social security taxes. If you have self employment income overseas, you might have to pay US social security taxes on it. It depends on the country of residence and if they have a tax treaty with the US. Some treaties say US people overseas don’t (and can’t if the wanted to) have to do that.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by in_reality » Tue Nov 07, 2017 6:33 am

Jayzee wrote:
Fri Nov 03, 2017 6:47 pm

Here is the problem. I opted out of social security (through the mission work) from the start, and I now have NO retirement!
What do you mean you "opted out"?

Did you file form 4371 to the IRS? (Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders
and Christian Science Practitioners)

https://www.irs.gov/pub/irs-pdf/f4361.pdf

If so, then no social security taxes are due on your earnings in Brazil.

If not, ministers need to pay Self-Employment tax equal to 15.3% of their minister employee wages (for social security and medicare). [Brazil doesn't seem to be one of the countries where you don't have to pay US social security taxes on self employment income - see a few posts below. There is one that appears to be waiting approval]

Here is a page on missionary taxes. There are many out there. https://www.taxesforexpats.com/guides/m ... guide.html
Last edited by in_reality on Tue Nov 07, 2017 7:52 am, edited 2 times in total.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by Jags4186 » Tue Nov 07, 2017 6:55 am

Jayzee wrote:
Fri Nov 03, 2017 6:47 pm
Hello.

I feel ashamed that I am in the condition I am right now, but please don’t judge. I just need some advice, if you would be so kind.

I am almost 44 years old, a missionary to Brazil, and live off of some donations and through teaching English here on the side. I am married, and my three kids are almost grown up now (the oldest is in college here already).

Here is the problem. I opted out of social security (through the mission work) from the start, and I now have NO retirement! I had always planned on setting up some retirement plan, but life “happened” and I never managed to. (I know that is foolish, that’s why I asked not to judge me; I feel bad enough already.)

I do have a Suntrust bank account in the United States, and recently wrote them and asked about their ROTH IRA plans.

I received the following reply from the bank:
If this is concerning a Bank- Side IRA (Money market or CD), please contact the branch on account or [phone number]. If this is concerning an investment IRA, for your request, please call [phone number], option 3, to speak to a representative between the hours of 8am and 6pm eastern, Monday through Friday.
I have absolutely no idea what the difference is; and, to be honest, I don’t even know if this is the root I should be taking – at least to have some retirement in my older years (It could be after my 70s.)

Do you have any advice/suggestions for me? I’d really appreciate it!
Get yourself a job and opt back into Social Security (or opt back in with your current job). That is step crucial. You probably don’t make much money as a missionary, and low income people disproportionally benefit from social security vs wealthier people. So by just getting SS you will put yourself in a much more solid footing.

Regarding SunTrust—banks are supposed to separate their investment products (think stocks and bonds) from their deposit accounts (think savings and Certificate of Deposits aka CDs). An IRA is simply a type of account. Inside that account you can hold all types of underlying investments. You were directed to contact the branch if you wanted a banking product — a CD — or to contact their investment team if you wanted to buy stocks and bonds.

I’d recommend you reach out to Charles Schwab—they have extremely low fee index fund (lower than Vanguard) and they have very low minimums to get started—$100 is all you need to start investing in a mutual fund. Vanguard has $3000 minimums for most of their funds.

Others will be able to help you better than me with regards to being an expat. Good luck you still have time, lots of people don’t start saving until their 40s and you have the added benefit of already getting your kids through school. That’s one BIG expense you won’t have to worry about going into the twilight working years.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by petulant » Tue Nov 07, 2017 7:22 am

Really the first thing you should do is determine how much you need or want to save and when you want to retire.

The second thing is to determine how much you currently have and how much your family makes.

From there you could determine a savings plan.

You haven't really provided much detail about your wife's savings or income, and for your income you've only mentioned about $2,000. We also don't have a good grasp on your actual living expenses. There's not enough information to suggest anything about a savings plan.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by expat » Tue Nov 07, 2017 7:41 am

Have you looked into this yet?

AGREEMENT ON SOCIAL SECURITY
BETWEEN
THE UNITED STATES OF AMERICA
AND
THE FEDERATIVE REPUBLIC OF BRAZIL

https://www.ssa.gov/international/Agree ... razil.html


http://www.ey.com/gl/en/services/people ... -agreement

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by in_reality » Tue Nov 07, 2017 7:47 am

expat wrote:
Tue Nov 07, 2017 7:41 am
Have you looked into this yet?

AGREEMENT ON SOCIAL SECURITY
BETWEEN
THE UNITED STATES OF AMERICA
AND
THE FEDERATIVE REPUBLIC OF BRAZIL

https://www.ssa.gov/international/Agree ... razil.html


http://www.ey.com/gl/en/services/people ... -agreement
I think you are right.

I am baffled why it's not on the IRS site https://www.irs.gov/individuals/interna ... agreements

Aaah I think it's not been ratified.
The U.S.-Brazil SSTA will enter into force on the first day of the month following 90 days after the two countries have notified each other that the Agreement has been approved in each country. The SSTA has been submitted to the Brazilian Congress but has not yet been ratified. The U.S. Congress is deemed to approve the SSTA if it has not acted to block it within 60 session days of having received it from the president. If approval and notification proceeds in a timely fashion, the U.S.-Brazil SSTA may enter into force in the second half of 2017.
https://home.kpmg.com/xx/en/home/insigh ... 7-017.html

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by Alex GR » Thu Nov 09, 2017 3:19 am

Could someone please explain... I think it would benefit both the OP and myself.
Anytime there's a post asking for portfolio advice without mention of nontaxable accounts, multiple people respond and suggest IRA/Roth IRA and/or to "max out" on contributions.
However, what if the person does not have any U.S.-based income? Are those pretty much a mute point in that case?

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by in_reality » Thu Nov 09, 2017 4:12 am

Alex GR wrote:
Thu Nov 09, 2017 3:19 am
However, what if the person does not have any U.S.-based income? Are those pretty much a mute point in that case?
No, and you can go back and read what I posted before for details.

What you don't understand is that Americans with income anywhere in the world have US taxable income. Once you understand that, you will be able to understand that enables them to make tax deferred contributions. Whether the income is US -based or not is irrelevant. It's subject to US taxation.

People can elect to exclude a limited amount of foreign income from US taxation, but that is an option. You must file a 2555 with your return to do that. Even if you can exclude all your income, you still need to file!

Again you can read what I posted earlier, but you don't have to do a 2555 and can claim foreign taxes paid on foreign income as a tax credit instead.

For the OP though, you are right tax deferred may not be needed that much. If the OP is in the 10 or 15% bracket, then long-term gains and qualified dividends are taxes at zero percent. So only short term gains and non-qualified dividends would get taxed.

The tax situation is fluid though, so if Brazilian taxes are high, it might make sense to use make a ROTH contribution by not using form 2555 and claiming Brazilian taxes paid as a credit on your US tax return.

Schwab accepts Brazilian residents so the easiest and best way might be to open an account with them. http://international.schwab.com/public/ ... intro.html

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by Bud » Thu Nov 09, 2017 5:15 am

Jayzee wrote:
Sat Nov 04, 2017 7:02 am
Thank you so much for your kind words of encouragement and advice, everyone! You were correct about my situation, LadyGeek! Thank you for retitling the thread!

Yes, I know it’s complicated being involved with two countries! To tell the truth, that is why I have always put it off (like an ostrich putting it head in the sand). To tell the truty, I have a hard time even understanding some of the advice here in the sense of where to sign up for this plan or that plan. That's why I began the process by writing to my U.S. bank, hoping they would have a simple plan, but even their answer was hard to understand. I'm not financially savvy.

Answering some questions:
1. I am American.
2. I will probably always live in Brazil.
3. I do earn some U.S. income through the mission (about US$ 2.000 a month).
4. I complement my income by teaching English, but I declare that extra income in Brazil through my wife (who is Brazilian), just because it is simpler that way.
Jayzee,

Good morning.

I appreciate your willingness to seek help with this.

I also lived in Brazil for many years, opted out of SS (form 4361), and excluded my overseas income (form 2555). IRA contributions need to be on earned income and since you make about $24k/ year and the foreign income exclusion is $102,100 for 2017, you probably don't have any "earned income" according to the IRS and therefore can't contribute to an IRA. These are the rules.

However, this doesn't preclude you from setting up a savings & investment account for your retirement. You just need to treat such an account as if it were your personal IRA because it is. Depending on how many dependents you claim on your US tax return, you still will pay $0 taxes on interest and capital gains if that amount is less than your standard deduction and normal exemptions. So, if it is only you and your wife, that is 2 exemptions and would provide (in 2016) $12,600 for a standard deduction and $8,100 for two exemptions for a total of $20,700.

If you own the Lifestrategy Moderate Growth Fund, which would probably be an appropriate fund for you, you could invest ALOT and still not need to pay any taxes on the distributions. Just and example, you would only start to be concerned about having more than $20,000 annually in dividends and capital gains when your balance gets to be close to $1 million, at which point you could probably afford to pay those taxes.

Long story short - open a Vanguard account which shouldn't be any problem as a US citizen, use a US address for mail, do all transactions online, get an all in one fund, and start investing regularly. DO NOT touch the money - it will serve as your personal IRA.

All the best!

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by in_reality » Thu Nov 09, 2017 5:24 am

Bud wrote:
Thu Nov 09, 2017 5:15 am

Long story short - open a Vanguard account which shouldn't be any problem as a US citizen, use a US address for mail, do all transactions online, get an all in one fund, and start investing regularly. DO NOT touch the money - it will serve as your personal IRA.
The problem with Vanguard is that they don't want US expats and will ask for US employer info. They are not set up to deal with expats and selling mutual funds to non-residents is prohibited.

ETFs though are permitted, and Schwab has an international account set up to give access to those (but not mutual funds).

Of course you can try to trick Vanguard, but I found working with Schwab to be better.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by Bud » Thu Nov 09, 2017 11:46 am

in_reality wrote:
Thu Nov 09, 2017 5:24 am
Bud wrote:
Thu Nov 09, 2017 5:15 am

Long story short - open a Vanguard account which shouldn't be any problem as a US citizen, use a US address for mail, do all transactions online, get an all in one fund, and start investing regularly. DO NOT touch the money - it will serve as your personal IRA.
The problem with Vanguard is that they don't want US expats and will ask for US employer info. They are not set up to deal with expats and selling mutual funds to non-residents is prohibited.

ETFs though are permitted, and Schwab has an international account set up to give access to those (but not mutual funds).

Of course you can try to trick Vanguard, but I found working with Schwab to be better.
There shouldn't be any "trick" involved.... the OP mentions getting paid for his mission work from the US which is income that is received through a US entity. Either he is an employee of that entity or a contractor for that entity, either way, there should be US employer info to provide.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by celia » Thu Nov 09, 2017 12:30 pm

Alex GR wrote:
Thu Nov 09, 2017 3:19 am
Anytime there's a post asking for portfolio advice without mention of nontaxable accounts, multiple people respond and suggest IRA/Roth IRA and/or to "max out" on contributions.
Most of us are forgetting that the OP only has $24,000 of regular income each year. That is not worth messing with tax-advantaged accounts and all the rules that go with them, in my opinion. (He is not able to put anywhere near $5,500 into the account each year.) Forget IRAs and just put it into a regular ("taxable" account). However, if the yearly growth is more than $10,000 (Single) or $20,000 (Married FIling Jointly) [rough numbers and I don't know how a non-citizen spouse figures into it], then taxes might need to be paid. We don't know the amount that the OP has in savings in the US (or I missed that part), but it might be worth moving it to a Target Retirement account geared to his age, so that the money can grow slowly and keep up with inflation. These accounts hold stocks and bond mutual funds so they are diversified, and the fund becomes heavier in bonds as time goes on (as the participants get closer to retirement). These are investments that are the "set it and forget it" type which would be good for the OP and can be held in a taxable account or in one of the tax-advantaged accounts.

OP, Does Brazil have some kind of retirement program for those who are too old to work but can get money each month? Can you become eligible for that?

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by halfnine » Thu Nov 09, 2017 5:22 pm

If you can "opt in" to social security for either you it will provide you the best longevity insurance around. That is going to require at least 10 years of contributions. In a perfect world that would mean contributing from 52-62 (obviously sooner would be less risky though). And, in those circumstances if you live a while you would definitely get much more out of it then you put in it. And depending on Brazil's status, your spouse might also be entitled to 50% of your social security as well while you are alive and all 100% when you are no longer around. US social security for those with low incomes and low years of contributions is one of the best deals you will likely find anywhere.

And, if you can't opt in to social security, is there any possibility your spouse could instead.

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by freebeer » Thu Nov 09, 2017 8:51 pm

halfnine wrote:
Thu Nov 09, 2017 5:22 pm
If you can "opt in" to social security for either you it will provide you the best longevity insurance around...
Is this true? I haven't seen any comparison of ROI of contributing to social security vs. say taking what would have been contributions and investing it and then say buying an SPIA. And if "investing" in SS is better I would guess that would only be true up to the first bend point which might not be exactly the 10 years that's been tossed out.

Any analysis of this available?

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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by in_reality » Fri Nov 10, 2017 3:56 am

Bud wrote:
Thu Nov 09, 2017 11:46 am
in_reality wrote:
Thu Nov 09, 2017 5:24 am
The problem with Vanguard is that they don't want US expats and will ask for US employer info. They are not set up to deal with expats and selling mutual funds to non-residents is prohibited.

ETFs though are permitted, and Schwab has an international account set up to give access to those (but not mutual funds).

Of course you can try to trick Vanguard, but I found working with Schwab to be better.
There shouldn't be any "trick" involved.... the OP mentions getting paid for his mission work from the US which is income that is received through a US entity. Either he is an employee of that entity or a contractor for that entity, either way, there should be US employer info to provide.
Ah, good point. That a good option then. Another consideration is if Vanguard has banned or in the future bans login from Brazil like they do Thailand and other countries that they think have had too much fraud. Of course, VPN is a solution there but I don't think you'd want to use a free offering and would have to pay.
Jayzee wrote:
Fri Nov 03, 2017 6:47 pm

I do have a Suntrust bank account in the United States, and recently wrote them and asked about their ROTH IRA plans.
To summarize so far:

A) ROTH and other IRAs are possible if you file your taxes a certain way for Brazilian income, but not all that beneficial for what seems to be your income. The US$ 2.000 a month is taxable to the US correct? If so, that can be used to fund a ROTH.

B) Opening a taxable brokerage account should be possible for you at Vanguard (though they don't really welcome expats so don't disclose that) and Schwab (great low cost ETFs but no mutual funds for expats per regulations. ETFs are very similar to mutual funds but slightly more hassle to buy and sell).

C) You might want to opt in to Social Security and pay taxes on self employment income. However, Brazil and the US have a treaty agreed to but not ratified. Once Brazil ratifies it, you will no longer be able to contribute to Social Security by paying taxes on Brazilian income. Perhaps you could pay social security taxes on income received on the US$ 2.000 a month. Is that possible?

D] If you go with Suntrust, find out what funds they offer in Brokerage. You want low cost index funds. Schwab and Vanguard both have funds that there is no fee to trade and the yearly cost is usually under 0.1%. A fund that costs 1% is just too, too expensive. A retirement CD is insured but rates are very low now.

2cents2
Posts: 301
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Re: In 40s and no retirement [US ex-pat in Brazil]

Post by 2cents2 » Fri Nov 10, 2017 5:37 am

I don't know the intricacies of taxes in OPs situation, but I wonder if OP might be eligible for the savers credit ?
https://www.irs.gov/retirement-plans/pl ... ers-credit

halfnine
Posts: 856
Joined: Tue Dec 21, 2010 1:48 pm

Re: In 40s and no retirement [US ex-pat in Brazil]

Post by halfnine » Fri Nov 10, 2017 7:46 am

freebeer wrote:
Thu Nov 09, 2017 8:51 pm
halfnine wrote:
Thu Nov 09, 2017 5:22 pm
If you can "opt in" to social security for either you it will provide you the best longevity insurance around...
Is this true? I haven't seen any comparison of ROI of contributing to social security vs. say taking what would have been contributions and investing it and then say buying an SPIA. And if "investing" in SS is better I would guess that would only be true up to the first bend point which might not be exactly the 10 years that's been tossed out.

Any analysis of this available?
I looked at this many years back and found the US Social Security system one of the best deals going for someone who spends a limited time in the labor force. Especially so for someone on a low income that doesn't exceed the first bend point. The OP would probably need closer to 15 years of contributions to exceed the first bend point. So, quickly, crudely and OTOH... if the OP is making 24K/yr and is self employed they could be looking at around 3.5K/yr in taxes for 10 years and in return get around 6K/yr in benefits at full retirement age. On top of that, their spouse may qualify for 3K/yr and get the OP's full 6K/yr after their death. The spouse is exempt from windfall elimination and accordingly any reduction in benefits, however, the OP might have a reduction in benefits if they were to receive any kind of foreign version of social security benefits.

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