Retiring in Italy: Your Five-Year Financial Roadmap

So, 5 years out, the first job is pretty unglamorous.

Figure out exactly what you own and how do you actually use it.

Most people know roughly what they've saved.

Oh, we've got about this much.

But retirement asks a different question.

Not how much is there, but how does that turn into money I can spend every month? So, pull it all together.

Your 401ks, your retirement plan through work, any IRAs, the ones you hold yourself, savings, regular investment accounts, pensions, and your Social Security estimates.

For each one, jot down three things.

what is it, whose name it's in, and when you expect to start using it.

Now, why does this type of account matter so much? Quick example.

Say you've got $50,000 in savings and $50,000 in traditional IRA.

On paper, same number, right? $50,000, $50,000.

But they're not the same $50,000.

The IRA money may still have income tax waiting on it when you take it out.

Savings? You move that from savings to checking, and generally nobody sends you a tax bill just for moving it.

And if you're leaving work in your 50s, there's another wrinkle.

Pull money out of traditional IRA before 59 and a half and you get hit with an extra 10% US tax unless an exception applies.

So before you say, great, we'll live off of this account first, find out what it actually costs you to touch it.

Oh, and while you're there, check your beneficiaries, the people named to get the account if you die.

That's one of those things we all need to update.

Then 15 years go by.

While you're doing the inventory, there's a second thing to look at early.

How are you actually allowed to live in Italy? If you're an American without Italian or EU citizenship, the usual route for retirees is the elective residence visa.

Everybody calls it the ERV.

It's built for people who can support themselves without working.

So, 5 years out, the first job is pretty unglamorous.

Figure out exactly what you own and how do you actually use it.

Most people know roughly what they've saved.

Oh, we've got about this much.

But retirement asks a different question.

Not how much is there, but how does that turn into money I can spend every month? So, pull it all together.

Your 401ks, your retirement plan through work, any IRAs, the ones you hold yourself, savings, regular investment accounts, pensions, and your Social Security estimates.

For each one, jot down three things.

what is it, whose name it's in, and when you expect to start using it.

Now, why does this type of account matter so much? Quick example.

Say you've got $50,000 in savings and $50,000 in traditional IRA.

On paper, same number, right? $50,000, $50,000.

But they're not the same $50,000.

The IRA money may still have income tax waiting on it when you take it out.

Savings? You move that from savings to checking, and generally nobody sends you a tax bill just for moving it.

And if you're leaving work in your 50s, there's another wrinkle.

Pull money out of traditional IRA before 59 and a half and you get hit with an extra 10% US tax unless an exception applies.

So before you say, great, we'll live off of this account first, find out what it actually costs you to touch it.

Oh, and while you're there, check your beneficiaries, the people named to get the account if you die.

That's one of those things we all need to update.

Then 15 years go by.

While you're doing the inventory, there's a second thing to look at early.

How are you actually allowed to live in Italy? If you're an American without Italian or EU citizenship, the usual route for retirees is the elective residence visa.

Everybody calls it the ERV.

It's built for people who can support themselves without working.