Saving for Retirement & Bank Accounts for the Location-Independent

Let’s Start /Grow Your Retirement Account!

In Challenges of the Location-Independent Lifestyle & Saving for Retirement, I acknowledged the issues plaguing most American digital nomads who are not wealthy and want to save for retirement. Now, I’ll give you some possible solutions.

Understand, I’m not a financial advisor of any kind. You will need to double check everything and make sure it works for you. Since I’m a U.S. citizen, I can only help out other U.S. citizens in this post because I don’t know anything about opening bank accounts and saving for retirement in other countries. I’m sorry!

No one said being a digital nomad was going to be easy. Even more so if you’re from the USA and haven’t been “back home” in some time. Saving for retirement can be a challenge if you don’t have a permanent address back in the states. When one fellow nomad told me if social security’s not available, she’d have the option of prison or suicide; I thought it was about time to make it easier for you to save money. What I’m going to say doesn’t apply to U.S. citizens with a family address” back home” or if you set up an account before leaving the USA. Now, if your account gets closed while abroad then keep reading.

If you’re like me and have no family address to use and completely forgot to think about your a-hem…future before leaving the U.S. of A. then read on…

It’s the elephant in the room of every U.S. nomad that’s living paycheck to paycheck with no option to save due to that residency question.

How to avoid suspicion with U.S. banks, Robinhood & Ameritrade

A lot of U.S. banking institutions are closing the accounts of U.S. citizens whom they suspect of not living permanently in the USA. How do they know this? I’ll get to that later. One Charles Schwab customer’s accounts (IRA, bank account) were frozen at a very inopportune time.

He was trying to purchase extra baggage at a discounted rate outside the airport!

When he was able to call Schwab, he was told to verify where he was living with a utility bill. Well….he couldn’t do this. Schwab said, “No problem! You can verify yourself at any of our banks in the USA.” Not exactly convenient if you’re living in Thailand! Sadly, his retirement and bank accounts were closed. Now, he’s desperately trying to find another bank.

What’s standing in your way of opening and/or maintaining a U.S. bank account from abroad without issues?

That pesky Patriot Act!

It requires every banking institution to have a U.S. residential address on file for you. This address must be your domocile. A domocile is the U.S. address you intend to be your permanent home and you intend to go back there. You can only have one domocile at a time according to Moores, Rowland & Tax Consultants, a tax firm that dates back to 1866 & has a solid reputation!

Every U.S. citizen has to have a domicile to pay taxes, vote, open a bank account, and handle all the other logistical details that come with being a legal citizen. Even when you don’t have a β€œhome” in the traditional sense of the word, you still have to choose and set up a domicile.” – Moores, Rowland & Tax Consultants

However you can have many residences. A residence is defined as where you live right now.

How to stay out of a U.S. bank’s radar and even open an account from abroad.

Shh! I’ll share a secret with you. If your account has been closed because of suspicion of living abroad or if you’re in need of a better bank account in the states, you can do it from wherever in the world you are with certain banks like Charles Schwab. I know, I know…they closed that man’s account! How do I know they won’t do the same thing to me? I’m sorry to say, you don’t know. It could happen to you, but let’s lessen the chances of that.

You’re going to need a powerful VPN with a dedicated IP address in the USA. You will only access your bank account from that IP address and VPN.

Again…YOU WILL ONLY ACCESS YOUR BANK ACCOUNT FROM THAT IP ADDRESS AND VPN. If you’re going to apply for a bank account then you will apply for it from that sweet IP address and VPN in the USA. If you accidentally connect to your bank account on your phone with a foreign SIM card then you’re flagging yourself to the bank.

Next, you’ll need a U.S. phone number for quick verification checks through SMS. You can get one through Skype.

Okay, so now you’ve sorted your VPN with a U.S. IP address, and you’ve got your U.S. phone number with SMS sorted.

What if Aunt Sally doesn’t feel comfortable with you using her address to get mail?

Not every family member wants to be your secretary. Purchase a mailing address! It must be a street address. In order to avoid complications, I chose a street address in Chicago, Illinois. This is my domocile address which worked out perfectly for opening a Schwab account. So far, no questions.

I see the question in your head right now…Um…Becca…Is this legal?

Well…A lot of us U.S. digital nomads are taking a “Don’t Ask, Don’t Tell” policy when it comes to U.S. banks. Is it really their business if you’re in Mexico for a year and then Thailand for five months? Not really. Just remember what I said about accessing your bank information from abroad. Only access this information through your VPN. Otherwise, your legal residence might get questioned.

What about state taxes? Won’t I have to pay them in the state where I have my mailing address?

Are you from one of these states?

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington or Wyoming?

Congratulations! You don’t have any state tax to worry about when tax season comes. If you’re from California, my heart goes out to you. That state makes it super difficult to prove you’re no longer there! Perhaps some Californians can comment on this.

In order to get out of paying state tax in Illinois, I had to file a non-residency return. I couldn’t find it online, so I had to call sit on hold for a ridiculously long time. Still, I got it! My only fear now is that Charles Schwab will find out I filed a non-residency return and flag my account. As said, so far I’m okay. I’ll let you if something happens.

Well, Becca…Through some miracle, I opened an account with Charles Schwab, Robinhood or Ameritrade! What can I invest in legally from abroad?

Charles Schwab , Robinhood & Ameritrade will allow you to purchase fractional shares of stocks and index funds! You’ll have to assess your risk tolerance for the stocks, but I hear very good things about S & P 500 ETFs (exchange-traded funds) if you can wait and invest for at least ten years.

Preferably more.

This means you don’t need a minimum amount which is usually high. You can start saving for your retirement even if you have no savings and work paycheck to paycheck. Put away as much as you can each month and pay yourself first.

Keep in mind, you cannot open an IRA (individual retirement account) while living abroad. Opening an IRA requires you to have a U.S. employer who’s giving you a W2. You can buy ETFs though…kind of.

If you’re staying in one place for over 183 days then technically, you’re a resident of that place and will need to have your investments reassessed for tax purposes. This also means…technically…you should close your U.S. account and open a bank account and buy investments in the country you’re in. See what a pain in the ass this is????

My dear readers, I hope you found this useful. The reason I haven’t posted direct recommendations on mailing services or VPNs is because I’m waiting to see if I’m approved for their affiliate programs. It couldn’t hurt to get a few pennies each time one you click on the link. Like you, I need all the help I can get! I’m very happy to share what I’m using if you message me. Keep on keepin’ on.

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