I am an American married to a British man and we've been living here in the UK for 3 years. We've started to talk about saving for retirement and aren't sure what our best option is.
We plan to move back to the States at some point but don't honestly know where we'll spend most of our time in the future - here or there. I've got a pension from a previous job there and he's recently started one here.
Our question is whether we're best off to start an individual pension account here (or in the US) as we don't want to rely or feel pressured on being set in one job or in one location for long periods of time - but still have a decent pension available to us once we retire. Anyone have any advice on what some of our options may be? Should the current strength of the pound against the dollar impact our decision?
On this same line, anyone have a recommendation for a reasonaby priced independent financial advisor who can help with US-UK finance/pension/mortgage info? We're very much not in that line of work so get befuddled easily ...
Thank you!
First of all I'd recommend that you and your spouse contribute to any job related retirement savings plan that you can as there's usually a company match or its a non-contribution pension plan (less common today) and that's like free money. Don't plan on moving the plan (basically you won't be able to) or getting at it until you retire. When you move to the US your husband should consider paying Class 2 NI contributions as well as SS, that way he may end up entitled to a pension from the UK and the US, I looked into keeping up US Fica payments on a voluntary basis, but I can't find any info on it.
Your husband can contribute to lots of tax advantaged investments in the UK like an ISA and I'd recommend maxing that out, here I'm assuming that your husband has no US tax liability ie no green card and that you file "Married filing separately". If you file together you'll have to declare your husbands income and I have no idea what that will mean, but I bet it gets complicated and the IRS may not recognise the tax exempt status of the UK ISA
If you contribute to a UK based tax deferred retirement plan I think you should pay the tax on that to the IRS as you go but use your foreign tax credits to offset it so you end up paying 0% tax. See this discussion,
http://talk.uk-yankee.com/index.php?topic=38158.0I don't think that you can contribute to a US IRA as you probably don't have enough US earned income.
Also as a US citizen beware of contributing to UK based mutual funds as there are complicated and draconian tax laws about these and also ISAs won't offer you any tax advantage. I'd recommend that your husband invest in the UK doing the company/personal pension thing and ISAs through something like a tracker fund with Halifax or Fidelity and that you invest in US based index mutual funds with one of the big firms like Vanguard or Fidelity. I'd invest equal amounts in US and European index funds to even out any currency fluctuations.
