Lawyer earning $200K retired at 41 to move his family to Portugal. Here’s how he’s managed to grow his net worth since

Money is typically top of mind when Americans plan for retirement.

Many make their plans with a financial figure in mind, one that can allow them to live out their days comfortably without running out of cash. But figuring out what that number needs to be can be scary.

Must Read

Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion' Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP

In fact, 64% of Americans worry more about running out of money in retirement than they worry about their own death, according to a survey from Allianz Center for the Future of Retirement (1). But what if you were able to grow your nest egg in retirement, as opposed to making withdrawals and watching your savings slowly diminish?

Take Alex Trias, for example. At age 41, Trias — a former lawyer who earned $200,000 a year — was financially ready to retire, as he explained in a guest column for CNBC (2). But it was where he chose to retire that allowed him to grow his savings after calling it a career.

Today, Alex lives with his wife, Noki, and his daughter, Evie, in Portugal, the No. 1 country where Americans hope to move abroad, according to a survey from Expatsi (3).

How Trias grew his nest egg in Portugal

Like many retirees, Trias and Noki expected to gradually whittle down their retirement savings when they moved to Portugal.

“But something surprising happened: Our net worth kept growing,” writes Trias. That’s because Portugal has a lower cost of living than Washington, D.C., where Trias and his family previously lived.

There are four specific areas where Trias and his wife are able to cut their annual costs: property taxes (saving $14,000), state income taxes ($15,000), health insurance and deductibles ($25,000), and food, entertainment and daily costs ($20,000).

That’s $74,000 in annual savings, or approximately $6,167 saved per month.

Considering that the median earnings of an American worker in the 45-54 age range is $71,552 — or $67,704 for those in the 55-64 age range, based on data from the U.S. Bureau of Labor Statistics — Trias and his wife are essentially saving the equivalent of a single American worker’s annual salary every year (4).

The cost of living in Washington, D.C., is also higher than the national average, ranking fifth among the most expensive U.S. cities in Numbeo’s cost of living index (5).

Story Continues

But that’s not the only way that Trias and his wife are getting ahead financially, as they’re also following the same strategy they used to save for retirement.

“We live below our means, reinvest the difference and let compounding do the work,” writes Trias. “The only difference is that now, instead of salaries, our income comes from investments.”

Retirement can be “the beginning of a more sustainable, intentional version” of building wealth, according to Trias. However, this strategy may not work everywhere, since some countries have a higher cost of living than others.

And there are other considerations, too — in some cases, moving abroad might cost you more than you were anticipating.

Read more: Are you richer than you think? Here are 5 clear signs you’re punching way above the average American’s wealth

What to consider before retiring abroad

The most expensive countries for American expats to retire in are Switzerland, Iceland and Norway, according to an analysis by William Russell. On the flip side, the cheapest countries are Mexico, Lithuania and Poland (6).

But the cost of living isn’t the only consideration, as multi-jurisdictional tax requirements and potential investment restrictions can also impact a retiree’s finances.

If you decide to retire abroad, you’ll still need to file a U.S. tax return, since the IRS taxes people based on citizenship rather than country of residency. While there are tax treaties and provisions that can help you avoid double taxation, a U.S. tax return adds an extra layer of complexity when it comes to filing taxes.

Before moving abroad in retirement, it could be worth consulting with a tax adviser who specializes in international tax laws so that you understand any potential tax liabilities. Keeping your investments in American-based brokerage accounts could help ensure that you’re compliant with U.S. tax laws.

But there could also be tax implications on personal retirement savings. For example, Roth IRAs help you avoid future taxation if you retire in the U.S., but not necessarily in your new country of residence.

“Most countries don’t recognize the tax-exempt nature of a Roth withdrawal. In these cases, your Roth contributions will likely be tax-exempt, but withdrawals of your gains will likely be treated as income, which greatly reduces the attractiveness of a Roth conversion,” according to Creative Planning International (7).

However, some countries have low or no-tax regions, like the Middle East and parts of the Caribbean. And some countries — like Singapore, Thailand and parts of Latin America — don’t tax foreign-derived income at all.

You can still receive employer-sponsored pension benefits and claim Social Security benefits if you live abroad (with a few exceptions, like countries where U.S. sanctions are in place). You may even be able to set up direct deposits with a local bank branch, so long as the country you reside in has an international direct deposit agreement with the U.S. (8).

Health care is another key consideration, since you won’t be covered by Medicare in a foreign country. That means you’ll need international health insurance — another cost to consider as part of your retirement budget. In many cases, the cost of health care may be lower than in the U.S., so in certain situations you may be able to pay out of pocket.

Moving abroad can come with surprise costs, so consider working with a financial adviser who specializes in international retirement before making the move. But with the right planning, you may be able to intentionally build wealth in retirement, just like Trias and his wife.

You May Also Like

Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in ‘great wealth’. How to get in now Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich — and ‘anyone’ can do it Warren Buffett used 8 simple money rules to turn $9,800 into a stunning $150B — start using them today to get rich (and then stay rich) I’m almost 50 and have nothing saved for retirement — what now? Don’t panic. These 6 easy steps can help you turn things around

Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

NBC New York (1); CNBC (2); Expatsi (3); Forbes (4); Numbeo (5); William Russell (6); Creative Planning International (7, 8)

This article originally appeared on Moneywise.com under the title: Lawyer earning $200K retired at 41 to move his family to Portugal. Here’s how he’s managed to grow his net worth since

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

View Comments