It's a long story and it would be inappropriate in this media to go into too much detail, but there were issues which, for anyone seeking to do something similar, will be of interest. I'm talking here specifically of a couple in our position moving on retiral from UK to USA. Perhaps one of our kids or grandkids one day.
The favourability or otherwise (and long term forecast of same) of currency exchange rates is really the key if, as in our case, pension entitlements/savings are in pounds sterling. The answer undoubtedly to my father that day was " it all depends on the pound / dollar exchange rate between now and the date we pop our clogs. But he'd have been horrified if I'd said that. I could have redeemed myself though by reminding him that one of the best bits of advice he ever gave me, was that from the moment I went through the doors of 12 South Charlotte Street in April 1976 I should plough in annually the maximum (as a percentage of earnings) allowed by the UK tax authorities for tax beneficial contributions to a pension policy. I did that religiously and of course the position was helped immeasurably by Mary's entitlement to a Scottish Teachers' final salary (defined benefit) scheme to which she contributed (plus AVC's) for the whole 29 years she was in teaching. In addition we both had prospectively our entitlement to the UK retirement state benefit scheme (or in now rather non pc terms - the Old Age Pension - OAP ). Mary became entitled to that at age 60 ( or just over ) and me at 65.
All good and well so far, but put into the mix the fact that both of us seem to have longevity in our genes, and with children and we hoped in time grandchildren living perhaps in different continents, we were about to embark, pretty much indefinitely it seemed on an expensive lifestyle. Answer quite clearly was that we'd have to be in paid employment in the USA for at least 5 years and for at least 6 months in every year.
We were exceedingly lucky on that score, but underpinned I think by a willingness on both our parts to do just about anything. I put my foot down on waiting tables in a restauraunt (although I'd have been happy as a baker as alluded to )!
The matter of housing was also of course an important one and here is one of the bits of advice I'd give to anyone following in our footsteps. The gain on sale of principal place of residence in UK is free of capital gains tax. Not so in USA. Note well ! We were lucky. It was brought to our attention just in time and as only Mary, at that stage was a US tax payer (I had not yet acquired my green card), we were able to take appropriate action to avoid what would have been a very, very uncomfortable US tax charge on sale of Parkley Craigs.
2nd important lesson for people following our footsteps. IRS do not recognise (as the UK tax authorities do) the concept of a tax free capital sum on withdrawing sums from a pension plan. There's a complicated exception which if you're not aware of it and plan accordingly, can land you with another substantial US tax bill. On the credit side here in USA, all former contributions by the taxpayer to a pension plan (even a UK one) form deductions against taxable pension fund withdrawals (significantly not the case in UK). Our good friend in Edinburgh and a former teaching colleague of Mary's at BHS, John McIver drew my attention to these issues, while we were making our retirement plans, in articles that he had spotted in the Daily Telegraph. Can't thank you enough for that John. The savings were huge.
One last thing that we were so, so fortunate on and it relates to the point above on currency exchange. When we sold Parkley Craigs we transferred the bulk of the proceeds over to our B of A a/c in anticipation of buying the house in Meadow Ranch (next door as it happened to the house we had rented for a year but off loading the lease some 3 months later at no cost). When transferring pounds to dollars in December 2006, we got an exchange rate of over $1.98 to the pound. Given the sums involved here, I calculated that for each cent the exchange rate changed, it was either costing us, or saving us, $12,500. The math (as they say over here) is not difficult in calculating what we'd have got for our Parkley Craigs proceeds at today's exchange rate of $1.22. Staggering is the only way to describe our good fortune in terms of timing.
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| Parkley Craigs Farmhoses - sold October 2006 |
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| 270 Meadow Ranch - purchased Feb 2007 |
Next installment. "Finding" Aspensnowmass and Settling in.
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