Non-highly paid 70 year old retiree planning a move abroad is interested in rental assistanceLow-paid 70-year-old planning to move abroad, wondering if hiring professional assistance is worth it.

Updated: October 14, 2023, 10:46 am.

Question:

I am 70 years old and I live enough on social security as I am not a demanding person. My social security is about $24,000 a year and I am in a low tax bracket. I paid off my small apartment and have no debt. I've been considering living abroad temporarily in Southeast Asia (Thailand or Malaysia because living costs are low there) when the weather in my area gets to around 20 degrees Celsius. I still have retirement money from the company where I worked before I retired, and I have a traditional IRA. The total pension plus IRA is about $500,000. I'm thinking about rolling the retirement money into a current IRA, but not withdrawing it immediately as a lump sum to avoid paying taxes. I understand that at age 72.5 or possibly 73, I will need to meet the required minimum benefits (RMDs). What is the best move for me given my pension from the company? Also, when it comes time to meet the required minimum payments (RMDs), will the annual withdrawal affect my tax status? If so, what taxes do I need to pay based on my total income, including social security? Will an advisor be able to help me with this? If so, which one? (If you are looking for a new advisor, this free tool can help you find a fiduciary advisor who can meet your needs.)

Answer:

It seems like you've prepared well for retirement by cutting expenses and enjoying a meaningful lifestyle without luxuries. You seem to be asking the right questions. Good for you. Let's first start with your question about what to do with a pension from the company. "Based on what you say, transferring a pension to an IRA is probably a good solution. Taking a retirement annuity is appropriate for people who need additional monthly income, but that's not your case," says certified financial planner Josh St. Laurent on Wealth In Yourself.

Actually, if you're making do with your current income and don't plan to increase spending, it probably doesn't make sense to commit to lifetime monthly payments. It's important to ask yourself a few questions when you think about retirement. "Does it only cover your life or do you have a partner to think about?

With regard to the OMV issue, "At age 73, you'll have to start meeting required minimum distributions, and that will count as additional income. To give you an idea of what this would look like, a person reaching age 73 in 2023 would have to pay an OMV of $18,867.92 to a $500,000 IRA. That may change a little bit in the coming years, but gives you a rough estimate," says St. Laurent.

OMB will affect your taxes, but that doesn't mean you'll fall into a new tax bracket, depending on your tax status. Keep in mind that the amount of taxes you need to pay will be based on your total income from the HMO plus 85% of your Social Security (15% tax free) and any other sources of income you have. "Aggregate amounts determine your adjusted gross income for tax purposes, and the tax table is progressive at the federal level, so it's hard to say what is adequate without having all the numbers," says Joe Favorito, a certified financial planner at Landmark Wealth Management.

In other words, "it's best to consult with an accountant to determine the taxes that may be owed. I often collaborate with accountants as it helps with the big picture and determining how much tax to withhold for OMVs," says Heiss.

Let's also consider your idea of moving overseas. While moving to Southeast Asia may make financial sense, you need to ask yourself if you will enjoy living there. "Sometimes the best solutions aren't solely financial. I always recommend renting for two or three months before deciding on a long term residence, as vacations are not enough time to really understand. I see this a lot with clients who are moving from New York to Florida. They think they'll like it until they experience the Florida humidity in the summer," Heiss says.

You don't necessarily need an advisor, but you can seek help from a professional such as a certified financial planner. Certified financial planners are required to take extensive courses and trainings. In your case, it may make sense to find a financial planner who works for a fee on an hourly or project basis so you can better understand your current situation and available options, but not have ongoing fees. To find a professional, check the National Association of Personal Financial Advisors (NAPFA) website, the CFP Board's Let's Make a Plan website, or use this free tool from SmartAsset that can help you find a fiduciary advisor that may fit your needs. You may be able to handle it on your own, but an initial opinion from a professional may give you helpful ideas or recommendations that you can implement on your own. Here are the questions you should ask a financial advisor before hiring one. Questions were edited for brevity and clarity. If you have a problem with a financial advisor or are looking for a new one, email [email protected]. Alyssa Wolfson is a freelance writer for MarketWatch Picks.