If you’re looking to spend retirement abroad and strengthen both your faith and your Jewish identity, then you may want to retire in Israel. Moving to Israel is generally referred to as “making Aliyah.” While the process can get a bit complex, there are plenty of resources available to help you along the way. Israel certainly isn’t thought of as a retirement destination as quickly as somewhere like Mexico, but it has everything that makes for pleasant golden years.
Consider working with a financial advisor as you explore retiring abroad.
Average Cost to Retire in Israel
The cost of living in Israel is somewhat lower than in the U.S. According to Numbeo, the cost of living in Tel Aviv is 33% less than it is in New York City. A family of four will have estimated monthly costs of $5,560, while a single person will have estimated monthly costs of $3,150. The monthly cost of a 900-square-foot furnished apartment ranges from about $2,100 to $2,500.
In other words, you’ll still need your fair share of savings, though there are several ways you can supplement your nest egg. In certain circumstances, the Israeli government will provide financial aid to people making Aliyah. This could take the form of rent subsidies, discounted mortgages, a complimentary flight to Israel or even a stipend of some kind in rare cases. To determine your specific eligibility, you can contact the Israeli Ministry of Immigration and Absorption, the Ministry of Aliyah and Integration or a private Aliyah assistance company like Nefesh B’Nefesh.
If you’re eligible for Social Security benefits in the U.S., you can typically continue to receive those while living in Israel. This can be a big help since retirees who move to Israel over the age of 60 are generally ineligible for an Israeli government pension. However, if you retire in Israel before you reach your full retirement age (FRA), you won’t be able to work more than 45 hours a month.
How to Retire in Israel – Aliyah
Aliyah is a Hebrew word that technically means “rise” or “ascent.” Effectively, however, it has come to mean moving to Israel and becoming an Israeli citizen. This became formal thanks to the Law of Return, an Israeli law passed in 1948. The Aliyah process is for people of the Jewish faith. Those who make Aliyah are referred to as “olim” (plural) or an “oleh” (singular). While there are plentiful resources available to help you through it, making Aliyah can be a bit complex.
To start the Aliyah process, you’ll need to fill out an application. You’ll need a passport, a birth certificate, proof of Judaism, a supporting statement from you about why you’d like to move, several completed forms and, in some cases, a letter of recommendation. Once you’ve submitted your application, you’ll interview with a representative of the Jewish Agency for Israel, known as a Shaliach. After this, the Israeli government will inform you of your approval status for Aliyah.
If you obtain approval to move forward in the Aliyah process, then acquiring a visa will be fairly straightforward. You’ll still need to go through it if you’re not already an Israeli citizen, however. Your Shaliach representative will instruct you on the specific steps you’ll need to take. Once you’ve obtained your visa, the only remaining step is to plan for your big move.
How to Retire in Israel – Benefits
New residents in Israel who have been approved to make Aliyah are also entitled to a number of benefits that range from financial, to social, to cultural. As mentioned above, the Israeli government provides financial assistance to new olim who need it. You could also be eligible for subsidized rent after eight months in Israel, reduced municipal property taxes (known as Arnona) and discounted mortgage rates. You’ll also face favorable taxes on income earned overseas, and you won’t have to worry about customs for various household products.
Culturally, you can learn the Hebrew language for free at various locations throughout the country once you arrive in Israel. The course, known as an Ulpan, is an intensive, five-month process. It’s designed to help you to assimilate into the Israeli lifestyle as well as master the Hebrew language.
Socially, the Aliyah process makes it easy for you to find other people who are going on the same journey as you. Occasionally, private Aliyah companies can even organize chartered flights where every passenger is going to Israel to make Aliyah together. This can help you to begin establishing a community, which can significantly ease the transition if you don’t already have friends or relatives living in Israel.
How to Retire in Israel – Healthcare
The Israeli public health insurance system is administered through the National Insurance Institute or Bituach Leumi. Bituach Leumi accepts every person who applies, regardless of any pre-existing conditions. As a new oleh, you won’t have to contribute to insurance through Bituach Leumi for the first 12 months.
There are also private insurance options in Israel. However, these companies typically don’t accept applicants with pre-existing conditions or people over the age of 65. Depending on what insurance you currently have in the U.S., you may be able to continue with that coverage for a short period of time while you find the best Israeli option for your situation.
How to Save for Your Retirement
Saving for retirement is an effort that usually takes decades to realize in full. Before you can start the process, however, you’ll have to decide what kind of lifestyle you’re looking for in your retirement. Once you make that decision, you can begin to calculate how much you’ll need to save. It’s always easier to save in earnest if you have a rough figure to build toward.
If you’ve had a full career in the U.S., you are more than likely eligible for some type of Social Security benefit. Also, you may have some sort of pension income in retirement if you’re a government employee or a teacher. You’ll still need to save up to supplement this income. The most popular options to do so are either an individual retirement account (IRA) or a 401(k) plan. Note that you can only access a 401(k) plan if your employer offers it.
The most crucial element of retirement saving is making sure you start early. If you begin saving while you’re young, then you will reap the benefits of compound interest throughout your career. Because your money will make money of its own along the way, you won’t have to save as much.
A retirement in Israel can be extremely attractive to many Jewish people who are looking for a way to embrace their faith in retirement. Living in Israel is quite a bit different than living in the U.S. Because of this, you’ll need to put a lot of thought into your decision. If you decide to move forward, you’ll want to begin the process around six to eight months before your move.
Tips for Saving for Retirement
- A crucial aspect of saving for retirement is making sure your retirement stays untouched. You may feel temptation to use the money in your 401(k) if things are getting tight, but you’ll end up paying for it down the line. An emergency fund can be a good alternative if you need some extra cash.
- The process of planning to retire abroad can be complex and confusing. If so, talking to a financial advisor could be a big help. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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