With just under 4,000 retired Americans getting Social Security benefits in the Netherlands at the end of 2019, this Western European country may not stand out as an obvious choice for retirement among some of its neighboring countries, but its high standard of living, universal health system and centuries of rich traditions, culture and food could make this the ideal retirement place for you.
If you want to retire in the Netherlands, a financial advisor can help you create a retirement plan to reach all of your goals and needs.
Cost of Living and Housing
The cost of living database Numbeo says that consumer prices in the Netherlands are 9.9% higher than the U.S., when you exclude rent. And if you compare the overall cost of rent between both countries, American retirees can save a small amount — the Netherlands is 4.19% cheaper than in the U.S. But when you compare rents between specific cities, your Social Security dollars could go in some cases a lot further in this Western European country than in the U.S.
For a specific comparison, let’s take a look at Amsterdam, which has just over 1.1 million people. Average rent in the Dutch capital is 41% lower than in New York City. A one-bedroom apartment in Amsterdam’s city center averages $1,932.64, while a similar apartment in the Big Apple could cost you $3,269.65.
If you want to compare the average cost of rent in Amsterdam with other U.S. cities, the Dutch capital is 19.72% cheaper than in Los Angeles and 2.32% lower than Miami. However, Amsterdam rent is 3.54% higher than in Chicago, 41.80% higher than in Houston and 53.65% higher than in Phoenix.
So while the Netherlands may not be as affordable as other European countries, it may still be a reasonable choice depending on your financial options.
Retire in the Netherlands: Visas and Residence Permit
The Netherlands, like other European countries, is part of the Schengen Agreement, which means that American retirees are allowed visa-free entry into the Dutch country as tourists or for business purposes up to 90 days. If you plan on a longer residency, you will have to apply for a permit. Requirements will differ, depending on the reason for your stay. However, you should note the Netherlands has no specific option for retirees. So your pension income needs to be sustainable.
You can apply to the Immigration and Naturalisation Service (IND) for your residence permit once you have arrived in the Netherlands. In some cases, you will need a sponsor, such as an employer or partner, who will also need to submit an application (TEV). Once the IND approves your permit, it will be valid for up to five years.
Retire in the Netherlands: Healthcare
Universal healthcare is mandatory in the Netherlands — the country’s system makes health insurance compulsory for all residents, and expats are no exception to this rule. So American retirees who are permanent residents living in the Dutch country for more than three months will have to purchase private insurance. And to do so, you’ll need to register with your local council and receive a service number (BSN).
The basic insurance plan costs between $121 to $146 out of pocket, which will then become a monthly recurring payment. The government also reviews the mandatory deductible account and adjusts it yearly when needed. For example, in 2019, this amount was $493. In addition, consumers can pay a voluntary deductible on top of the mandatory payment in exchange for a lower monthly premium.
Retire in the Netherlands: Taxes
If you are earning money in the Netherlands, then that income is subject to taxes. Those employed by a company will have the amount automatically deducted from their salary through a wage tax. But if you are self-employed, you will have to calculate and pay your income tax on the annual tax return.
The Dutch tax office divides income tax into three categories based on income bracket, worldwide income, individual gross salary and pensionable age. Non-residents are only subject to a tax on the income they earn from sources in the Netherlands.
Beyond the Netherlands, you should keep in mind that American citizens are still required to file tax returns with the U.S. government, independently from where they reside. However, expatriates in the Netherlands could get some relief thanks to a tax treaty between both countries that eliminates double taxation. On top of that, expats can also benefit from the 30% ruling. This policy allows employers to pay their foreign-born workers 30% of their income tax-free continuing for up to 10 years.
Retire in the Netherlands: Safety
While the Netherlands can be picturesque from the windmills to the tulips, general safety precautions are advised, as in other countries, to safeguard against crimes that could target tourists and other expats.
The U.S. Department of State’s Travel Advisory says that the Netherlands is a low-crime threat, but puts the Dutch country at a Level 2 due to possible terrorism threats. The Netherlands raised its own threat level as well in 2019 and put forth counterterrorism measures to address the situation.
But while individuals are urged to exercise caution, the average traveler in the Dutch country has a generally safe experience, even in major cities like Amsterdam, Rotterdam and The Hague.
While the high standard of living in the Netherlands could be challenging for budget-savvy retirees, the Dutch country’s universal health system and rich culture could make it the ideal retirement place for you.
Tips on Affording Retirement
- Use a professional to make a sound plan. Retiring to the Netherlands can create a lot of financial complications. A financial advisor can help you navigate the nuances to achieve your goals. SmartAsset’s free tool matches you with up to three financial advisors for free.
- Diversify your retirement income. The Netherlands is one of the more challenging European nations to rely on your Social Security benefits alone. SmartAsset’s Social Security calculator can help estimate your benefit amount and compare it with the costs of living that you will have to pay during retirement.
- Take advantage of tax-friendly retirement accounts. Whether you want to retire comfortably abroad or in the U.S., both an IRA or a 401(k) plan will offer you tax benefits, and help you grow your retirement savings with compound interest.
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