Living In The USA – The Expats’ Guide

How to move to and settle down in the USA - a comprehensive guide to help you plan and succeed in moving across the Atlantic.

Living in the USA can be an extremely attractive idea: this is a country that can offer stunningly beautiful beaches, cutting-edge modern cities, a sophisticated lifestyle, all the activities and entertainment one can only dream of, no language barrier and a very familiar cultural background for Brits.

Is the USA a good place to live?

Yes, it can definitely be a good place to live provided you have an adequate income for your chosen location.

Living in the USA
Laguna Beach, a small coastal city in California, is known for its many art galleries, coves and beaches, tide pools and a boardwalk leading to the paths and gardens of nearby Heisler Park.

The country is very diverse and people are welcoming. There are so many amazing natural beauty areas, wide-open spaces and different climates to explore. From the year-round sunshine of California to desert plains and tropical regions, the USA has it all.

Another good thing about living in the USA is that due to the size of the country Americans have more than twice the average living space of Europeans.

It means that land prices and property prices are generally more affordable. There are, of course, exceptions such as New York City, San-Francisco and some other locations with eye-watering price labels.

Can a UK citizen live in the USA?

Yes, if you have a green card that allows you to reside legally in the USA. You can do so by getting employed by a US company or being sponsored by your family member who already lives legally in the USA. 

There are also other options that we will discuss further.

Can a foreigner retire to the US?

The answer is no, and yes. 

Although the States doesn’t offer any retirement programmes for residency, there are legitimate ways to go about it. 

There are no special retirement programmes or visas in the USA and, just like with Australia, unless you have children who are citizens of the US and can sponsor you, the process of moving to and living in the US in retirement can be quite complicated.

You have a few options:

Staying on a Tourist Visa or snowbirding

The easiest way is to obtain a plain tourist visa – a B2 Visa – which is usually granted to pensioners for 10 years and permits multiple entries. This way, although simple at first sight, has two main limitations: you can’t stay in the States more than 6 months in a year, and you can’t apply for a social security number. 

Without the latter, such day-to-day things as obtaining a driving licence, opening a bank account, getting health insurance etc., can become complicated too.

On the plus side there are some considerable advantages: by not taking up US residency you are effectively not liable to pay tax in the USA.

So if you are ready to spend winters in Miami (which are gloriously warm and sunny), or California, for example, and enjoy the rest of the year somewhere else, it can work perfectly well for you. 

The snowbird lifestyle can be fun and active, getting you the best of Florida’s winters and leaving you to spend summers somewhere else.  You can still rent or buy a property, and there are ways to solve other issues like your bank account if needs be.

Living in the USA
Key West, the southernmost city of the Florida Keys – a string of tropical islands stretching about 120 miles off the tip of Florida, and its famous Duval Street full of bars.

Buying a business to retire to the USA

Another way is buying a small business in the States and creating jobs for locals. The necessary investment is anything between $100,000 and $500,000 – a sum that can qualify as ‘substantial’.

It will enable you to apply for an E2 type Visa, which allows you to stay in the country as long as your business runs successfully, and comes with the right to obtain a social security number. As long as the E2 business continues in the US you can continue to extend your visa indefinitely.

Investor’s Visa

You have an option to invest a minimum of $1,800,000 or $900,000 in a high-unemployment or rural area, considered a targeted employment area, in order to apply for an E5 Investment Visa.

The programme is officially known as the Immigrant Investor Programme.

Under this programme, entrepreneurs (and their spouses and unmarried children under 21) are eligible to apply for a green card (permanent residence) if they make the necessary investment of at least $900,000 in a commercial enterprise in the United States, and plan to create or preserve 10 permanent full-time jobs for qualified US workers.

You can make your investment either directly in a new or existing business, providing it will create new jobs, or through a 3rd party-managed investment vehicle (private or public), which assumes the responsibility of creating the requisite jobs.

Regional Centres may charge an administration fee for managing your investment.

The pros and cons of a US Investor’s Visa

In theory, under this programme, not only can you obtain permanent US residency, but when the project you have invested in is completed and sold, you should get your money back plus a little interest.

But in reality there is always a risk of losing money. So one needs to be extremely cautious and do thorough research concerning any project or FDRC available for investments when choosing the E5 as a way of obtaining residency.

The E5 can have its advantages, though.

In the first place, you are not required to start a business or create employment directly; it’s enough to choose a third-party investment vehicle and invest through them.

Secondly, there are no additional requirements for your spouse or partner.

Thirdly, it is often the only permanent residence option for retirees.

The question you ought to ask yourself is whether you really need and wish to obtain permanent residence and live in the country full time.

Maybe, you can be happy snowbirding to avoid the grey British winter by hopping on a plane to California or Florida. Then, you would return to the mild and green British summer just when summer temperatures in your US location become a bit too high to be comfortable.

How much money do I need to live comfortably in the USA?

On average, with $70,000 income a year you can live pretty comfortably in the states, although this number highly depends on your chosen location. 

Living in the USA
Typical Florida home in the countryside with palm trees, tropical plants and flowers

In some areas of the US $80,000 per year won’t be enough, while in Florida, for example, $50,000 -$75,000 a year can provide a decent life for a retired couple.

There are also variations within states. For example, in Florida $50,000 will be a good income to live in Jacksonville, however, to afford a comfortable life in Boca Raton you will be looking at $75,000.

This is including housing (an average rent or mortgage) and healthcare expenses. Obviously, it will be cheaper if your home is bought and paid for. 

In the expensive areas of California, you would be looking at $200,000 and above to live comfortably, while in cheaper areas like some Central Valley cities the cost of living is lower and quite comparable to the US average.

Money matters 

Money matters! Your wealth is the backbone to a peaceful and stress-free retirement, so looking after it is a priority when you consider moving abroad.

Moving to or even snowbirding in the USA may have a great impact on your wealth status if you do not give serious considerations to such issues as currency fluctuations and taxes.

How to efficiently manage your currencies 

If you derive your income in any other currency but the dollar, you need to find the best strategies of bringing the money into America, taking into consideration currency exchange rates, international wire transfers and the banking system in America.

One option is to open an international bank account that can cater for all the currencies you need. 

Or you might want to take your pension and investments from the UK and reinvest in products that will bring you income in a required currency. 

How much tax you will pay in the USA

Taxation in the USA is a big and complex issue. The best thing you could do is to take advice from a taxation specialist to make sure you are totally compliant no matter what your visa status and sources of income are.

US taxes for residents

If you plan to become a resident of the USA, you need to seek professional advice as to your tax liabilities and procedures and how to structure your assets by taking into consideration the differences in the US tax system.

Living in the USA
Trail through redwoods in Muir Woods National Monument near San Francisco, California

The United States has a worldwide taxation system and all income earned by you as a US resident, whether it is in the country or outside, is subject to taxation by the US government.

Both the federal government and the state you reside in can tax your income. 

The federal income tax has seven tax rates ranging from 10 percent to 37 percent. State taxes differ from state to state. In general, state tax rates range from 0% to more than 13% as of 2020. 

California, Hawaii, Oregon, Minnesota, and New Jersey have the highest taxation rates. 

There are states that don’t impose an income tax at all. If you live in Florida, for example, you don’t pay a state personal income tax, an estate tax or an inheritance tax. However, there are various sales and property taxes, and some are quite high.

US taxes for non-residents

If you are a non-resident, don’t work or get any other income from the USA, don’t have a business or a trade there, you might be exempt from paying income tax.

However, if you are engaged in business activities or any form of employment, for US tax purposes, non-residents should file a non-resident return (Form 1040NR or Form 1040NR-EZ).

Studying, teaching, and doing research are all considered to be activities in which the taxpayer is engaged in a trade or business.

US bank interest received by non-residents is not considered a US source of income and is not taxable.

Tax liabilities can be different depending on your personal circumstances. For example, you will need to file your tax return in the USA if, during the time of the year when you are out of the country, you rent out your American property.

Taking professional advice on tax matters is the best way to ensure your peace of mind and absolute compliance with any and all reporting requirements in America and back home in the UK as well.

Property taxes

According to FIRPTA (Foreign Investment in Real property Tax Act of 1980) the US government has a right to withhold income tax when a property is sold, exchanged, gifted, transferred or liquidated by a foreigner.

In case you are wondering whether a foreigner can buy a property in the USA, the answer is yes, you can buy a house in the States no matter where you come from.

You will pay around 10% to the Internal Revenue Service and some more besides to the State government.

Wills and Inheritance

There is a double taxation agreement between the UK and USA, which protects your assets from being taxed twice when inherited by your family.

Living in the USA
A stunning view of Zion Canyon in Utah near the town of Springdale

It is important to make the necessary legal arrangements to cover the inheritance procedure of your assets, including any property that you have in the States.

The State Law binds American courts to follow valid foreign wills, so your assets will be inherited according to your wishes. If you don’t leave a valid will, then the State will apply its own inheritance rules, which are different from those in the UK.

To make sure your loved ones are not left to battle legalities, do seek out the advice of a professional who has knowledge of UK and US inheritance law.

Banking and bank accounts in the USA

The US banking system is very similar to the British banking system: everything runs pretty much along the same lines as it does at home.

The difference is, funnily enough, in the language: a current account is called a checking account, and a deposit account is what we in the UK call a savings account. Savings banks provide loans and mortgages.

Unless you have already set up an account with a US branch of a big international bank, you should go with one of the bigger American banks such as Bank of America, Citigroup, JPMorgan Chase, Wells Fargo or Goldman Sachs.

The reason for this is that with bigger banks it is easier and cheaper to cash cheques and use ATMs all over the country, while if you use a small local bank, you might get an unpleasant surprise in the form of high charges for using an ATM when you are out of state.

Opening a bank account in the USA

Opening a bank account when you are already in the country might prove a bit tricky since you have no credit history in the USA. It is possible, though, to open an account in advance of your move.

You might already have an account with a bank that has branches in the States, for example HSBC or Barclays. So it is definitely worth checking with your UK bank whether they have any presence in the US and how they can assist you in opening an account with one of their US branches.

If you wish to open an account when you are in the US, essential requirements will be your ID, proof of address and proof of residency. But do call the bank in advance to find out what else they will need to assist you in opening an account.

US healthcare and your options

How does healthcare work in the USA?

There is no nationally organised and maintained healthcare system as such in the States. Healthcare in the USA is only 48% publicly funded and in general it is provided by private hospitals and clinics.

Most US citizens have medical insurance. Usually, the insurance policies come with an employment package and cover immediate family as well. There is also a vast number of uninsured residents.

US retirees get healthcare through the Medicare programme, which in reality is federal aid for the poor.

Healthcare options for expats

Unlike many other popular retirement destinations (i.e. any European country, for example), the USA does not demand expats take out health cover. Also unlike many other countries, the US does not have any mutual agreement with the UK about healthcare for its citizens.

Living in the USA
Fishing boats docked in Perkins Cove, Ogunquit, on coast of Maine south of Portland, USA

So, unless you are wise enough to sort your health insurance out prior to going to the States, should anything happen and you find yourself in need of medical assistance, prepare to pay a fortune or be refused treatment.

Only emergency cases are treated without prior payment (but you will still be charged after), and treatment may be refused without evidence of insurance or a deposit. It leaves health insurance as the only viable option to make sure your health is protected.

Health insurance – the best way to look after your health in the US

Taking out private medical insurance is a very wise way to cover your health. It is advisable to shop around and see what international insurers can offer, especially if you do snowbirding and need cover for just 6 months of the year. 

It will cost a lot, but still less than paying out of pocket if you or your partner has a serious condition, or even just a broken bone.

Comprehensive cover vs budget cover

Comprehensive health insurance covers almost everything. By taking it you will be able to live relatively stress-free as long as you accept the huge cost of your monthly payments as something inevitable. This can be really hard for Britons, coming from the country where the NHS is a core value and often taken for granted.

Those who can afford comprehensive cover will have access to some of the best medical technology in the world. American doctors are highly trained and many of the best specialists can be found in the USA.

Other advantages include short waiting times for operations and specialists, as well as competing medical services.

Budget cover is a bit cheaper, but still expensive enough to shock most Brits.

Budget plans usually cover only an in-patient treatment and most tests are left out. American doctors tend to order more tests and scans than the European norm. They will put you on a full course of treatment when a British doctor would advise you to take Lemsip.

Tests are often expensive and with a budget type of cover you will have to pay for them out of your own pocket.

Hospital treatment and emergencies

Hospitals in the USA are state of the art facilities with the latest equipment and well-trained doctors and staff.

Be prepared to provide proof of your insurance before any treatment is offered to you, however.

If you need emergency treatment and cannot get to the hospital, you can call 911 for an ambulance. If your insurance doesn’t cover an ambulance, you will be charged a considerable amount.

In an emergency, you will be treated without payment or insurance issues coming first. However, you will still be charged after the treatment.

Pharmacies and prescriptions

It is possible to get almost all prescription medicines at a pharmacy in the USA.

Remember to keep all receipts however, for medicines in America are expensive, and you will wish to claim the costs from your health insurance provider.

The amount of prescription medicine that can be brought into the country is strictly limited by law. You must have a prescription from a doctor to prove that any medicines being brought into the USA are strictly for personal use.

Check what the limits are and comply with the rules, otherwise the drugs will be confiscated at customs.

Health tourism

Due to the prohibitive costs of the US healthcare system, more and more US citizens practice health tourism – travelling to another country for non-emergency treatment.

Nothing can stop you from doing it if you wish to. Moreover, very often health insurance companies themselves will prefer the treatment abroad to save costs.

This fact has been widely exploited by the countries of Latin America. For them, it’s a lucrative business, but also very competitive.

Some of them have become famous as high-quality providers of medical services for US citizens.

For example, healthcare systems in Panama, Costa Rica and even Cuba are welcoming health tourism. There it is a booming business.

The industry is highly competitive, so the participating hospitals are very advanced and modern, and the staff are highly trained and speak English.

Health tourism brings millions into a country’s budget and at the same time also significantly reduces the costs for American insurance companies and the personal expenses of the patients. Taking into consideration the high quality and relatively low cost of the services, it could be a good option to get your health sorted.

Living in the USA – summary

The USA has so many wonderful destinations where retirees can enjoy their life to the fullest. If you can overcome visa difficulties and provide for your healthcare, you might well find in the States that perfect retirement lifestyle you are looking for. 

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