Episode Transcript:

Stoy Hall, CFP®:
0:00

got a first timer on this whole podcast, let alone this series, but Tommy Sykes with travel travel retirement, which is a phenomenal thing. We’re going to have an episode directly about him, his business and everything that he does. But be sure to check out his YouTube channel today is all about the 12 days of giving. And I’m very excited to have his client story, knowing his background and everything that’s a little different than we’ve had on before. So without further ado, tell me once you once you tell us your client’s story, give us the profile and let’s get into

Tommy Sikes, CFP®:
0:27

this. tHe travel retirement phenomenon, I’ll say is fell in my lap. I as you and I follow each other on Twitter and I’m a huge fan of affordability. We have a major, housing issue in the United States. Not only just numbers of houses, but obviously the cost and and I, a while back, I was, I’m a big fan of Italy and France. For travel and been to both countries, France several times. Anyway, I started posting these just short tweets of pictures of very affordable, super affordable housing in in Italy and France. And again, just completely just a personal Oh my gosh, this is pretty cool. Did you realize you can, buy a house in Italy for, 90, 000. Completely livable. Anyway, I got a lot of responses from that. And and I was like, oh, there’s some interest here. And then I started realizing, these, this is a direct result of the housing issues in the United States and I grew up, I was very, money secure. My dad was a doctor. We loved, very well. I was honestly clueless to money for a long stretch. Until I realized like a lot of my high school friends and a lot of some of my college friends really struggled with their families and. A lot of it again is related to housing. And that insecurity about, affordability. It’s it’s a big issue. So anyway, the travel retirement is basically a platform where I’m showcasing these low cost affordable properties, which is like the carrot um, of the whole thing in Italy and France. Again, super affordable. It’s just, it’s. People, honestly, one of the most common questions I get from people is what’s wrong with these places? Are the walls filled with mold or, whatever? And it’s no there’s like demographic things that have gone on. People who don’t visit these places and live like I said, in the United States don’t realize how affordable it can be in certain parts of the world. But showcasing these low cost properties, I realized there’s a, there’s a need here for people to, again, not just, pack up and do it, but to give people options. And that’s what a lot of financial planning to me is about opening people’s eyes to possibilities, think about things that they maybe haven’t thought about before. Again, from the affordability standpoint, as, and you talk about this a ton, our, our industry, sadly. Is focused mostly on the higher net worth, people out there, the people where the affordability housing, especially. Is not necessarily an issue and so anyway, my, my idea with this and it’s a work in progress is again to provide a platform. Where people where we can build out basically, simple financial plans um, incorporating the possibility of again, an expat retirement, maybe. Moving to France or Italy um, whether you’re want to go and maybe just live on your social security, which is completely possible whether you want to sell your house, which maybe is appreciated some in the United States by a lower cost place there and then have that extra money to, to live, more sustainably there’s a lot of, there’s a lot of, moving parts but the big goal is again, open people’s eyes to the possibility. Absolutely. Absolutely. That just, I would call middle class Americans who are getting crunched, there are some avenues that, that they can consider that maybe they haven’t before. So that’s the kind of big picture, what I want to what I want to help educate people about. Yeah,

Stoy Hall, CFP®:
4:22

absolutely. So what does that client that I don’t want to say ideal client because it’s not the right word But like that person that we’re speaking to right now that may be in this realm Middle class. What does that look like from a I guess monetary standpoint where they’re at mentally that this expat idea would really trigger them. Cause there’s a lot of them out there, right? Even my own clients have thought about not being in the United States. So yes, they think about it, but what does that really make up look like

Tommy Sikes, CFP®:
4:53

or of that person? I Would say there, there’s a mix. There’s a good number of people who again, get in touch with me. They subscribe to the channel or they join the email list and they’ll. They’ll message me and say, Oh, we love your videos. Our, my grandmother was Italian and she grew up in this region. And, we’ve always wanted to go see like where the family came from. And, there’s a family connection there. There’s a lot of those where it’s, Hey, we’ve always talked about this. Ever since we got married and, after the grandmother passed away, and we talked about, we really need to do this and things get put off or it’s unaffordable at the time. Part of it is that people just have this longing for either a familiar, familial reason, or they’re again, just. France is the most visited country in the world. Italy is the fifth most visited country in the world. So there’s no shortage obviously of amazing things to see the food, the culture, the history, the landscape. But again it, it typically comes back down to a personal either a personal connection or a longing for that. The other thing, the other kind of common I don’t want to say, Issue, but the desire people have is there, maybe in their fifties or even in their sixties, they’re, they’re behind on, on the retirement savings. There’s a. There’s not a number I would, I would put to it because again that’s individual. Some people feel like if they had, 400, 000, they’d be. Richer than they ever thought they would, whereas it’s, a 1M for somebody else, but it’s that feeling of I’m running out of time. I have limited resources and I have the time, but the time is the issue. I don’t have the time to. Save 40 percent for 10 years, 10 years. I want to, I’m going to be in my 70s, maybe. And and so I want to make the most of what I have now. I’m like, you completely judgment free. There’s no, you are where you are. We can’t go back. But like I said, we can look at options. Let’s talk about, what we can do potentially and give people that. At least hope that things can be can be better or reach some dream that they had when they were younger. Yeah, I would say if you look at my videos on YouTube demographics and again, I assume they’re fairly accurate. Google. I Guess they know everything about everybody nowadays, but they’re, typically in the, I would say 45 to 65, 70 year old range is what it shows. So again, it’s just, it’s those people that are. Probably not super independently wealthy, because they would have already bought a place, in Italy, or it’d be their 2nd or 3rd house. But people who are either they have a dream, but then they also have fears and they’re not sure. Number 1, they’re not sure about the numbers, which is, it’s part of it, but that’s not the driving force. Usually it’s the, we, we want to, we have a desire we want to go towards or we have a fear that we’re not gonna be able to live like we want to hear. Yeah, so that the demographic usually is that kind of scenario. Okay,

Stoy Hall, CFP®:
8:20

and obviously the fears come up so I and we touch on briefly We don’t have to dive into them because you have YouTube videos on those But like the top three that off top my head obviously the affordability just in general is gonna be probably number one And then it’s probably more like the livability, like health care, taxes, those types of things. Can talk through those of affordability being obviously you said, probably for 90, 000 for us in America, that’s relatively low. So everyone’s Hey, is it full of mold? No, that’s a normal ass house. Can you talk to us about in terms of like, how does one achieve a mortgage? What does it look like over there? Is it different? And then we’ll back into, health care obviously American health care is a lot different than others. And then the third, like taxes, obviously taxes are a lot different as well. So can you

Tommy Sikes, CFP®:
9:07

attest to those three things? Yeah. And the housing, the affordability thing it also goes to rent. Rents over there are, again, relative to American standards, super affordable. You’re in, you live in Iowa. Is that right? Yeah. So I’m in like rural North Carolina, middle of North Carolina. It’s not crazy. It’s not like obviously Northeast or California prices, but still, over there you could rent in Italy in particular, it’s Italy is a lower cost generally than France, but parts of France are super affordable too. You can rent a two bedroom, uh, apartment, like in a little village, a little, in a town for six, 700 um, again. Ready to go no renovation renovations needed things like that. So it’s the purchase is very affordable, but also you can rent for very affordable. Affordably you mentioned mortgages, you can get mortgages in both. Italy and France, it’s hard though as a non citizen, as a non EU citizen, it’s not impossible. What’s probably the best idea for people who maybe you can’t afford to just buy, have cash and buy a place for cash is to actually rent for a year and establish a a history there. Unlike the United States, I don’t think Italy or France use like a credit reporting system. Like we do. So if you want to get a mortgage, you basically go to your local bank. aNd the point being, if you live there for a year, you open up a local bank account, you go in and see your banker on a regular basis. They’re going to be much more, reasonable when it comes to, Hey, I have all these accounts still in the United States, or I’m getting this. Here’s my social security from the United States. Yeah. It’s more personal, than just filling out a rate calculator with information, like in the United States, you might do where they’re going to, they’re going to check your credit score. Do you meet this number? Do you have this income? It’s much more analog,

Stoy Hall, CFP®:
11:15

more relationship based a lot. Like we used to be in the past, right? Like where it’s, Hey, I have a banker. He takes care of me in that relationship. As opposed to nowadays. It’s, it seems like if you don’t check any of the boxes, it

Tommy Sikes, CFP®:
11:26

doesn’t matter, right? Yeah, if you don’t check a certain box, you’re not even going to get a call back. You’re not going to get an email. But my point being mortgage is possible, but initially it’s probably again, we can build this into a plan to go over and. Rent first for a year again, meet people. Part of it too, is regardless of how much research you do online, there’s nothing like being boots on the ground, and when you go over there, you might realize this play this area region or whatever. I thought it was going to have this vibe, but it has this other vibe or it might be perfect, going over there and doing like a test drive of the expat retirement for a year. Like I said, rents can be very affordable can also give you a chance to look around for properties. If you want to, there’s a lot of properties online, but there’s, probably an extra another 40 percent of them that don’t get publicized online. You have to go to a, like a local real estate agent. sO yeah, mortgages, not impossible, but it’s not like the United States where you can just be like, Hey, here’s my income and my credit score, what do you, what you got, they’re going to be a little more risk averse for someone who, again you don’t already have assets there that they can potentially, Value and attached to your mortgage. But again it’s doable. It’s just a process that you have to go through. Yeah. What was the next one? Oh, healthcare. Healthcare. Yeah. Healthcare, which obviously is a massive cost in the United States. Obviously if you’re 65. Medicare covers a lot still cost involved with, policies and things like that. But Italy and France both have universal health care. And that’s not just for citizens, but for all residents, whether you’re. A citizen of the country or not. So I know I know with both of them, like with the rent thing, when you move over there you have to apply for a visa to get long term stay, and when you arrive, you do have to show proof of private health. Insurance program for the, at least the 1st year, and they basically want you to come over there and say, hey, I want to come live here. But number 1 I can prove I have this some passive income again. That can be social security, some investments. It could be, if you have rental properties in the United States, you can show there’s a number of ways to do that, but the health insurance is a big 1 to there. They’re like, hey. You can’t just come over here and the next week get free health care for everything. It just doesn’t make sense. But once you’re there and you become, a resident again, they’re very, it’s written into their basically constitutions that everybody gets health care. It doesn’t matter how much you make, how much you have. So there’s a process you go through to apply for that can take, several months. And so they, they require you have some health care, at least that 1st year after that, again, super affordable. Even if you were going to pay, most of it’s free. Literally free. But even if you were going to go in and pay out of pocket for stuff, we’re talking 20 bucks, 40 bucks, 50 bucks For a full doctor’s visit, consultation tests, everything like that. It’s unbelievably affordable. But again that’s why a lot of people love these countries is they, as a society they’ve made this decision that, Hey, yes, we’re our tax rates, income tax rates are higher, but. You’re going to get a bunch of benefits from it, healthcare being a huge one. So yeah, and that’s a massive savings again on, on what you would pay in the United States, obviously medical bankruptcy in the United States is insane.

Stoy Hall, CFP®:
15:08

Yeah. And that’s just talk. We’re just talking about cost of just premiums a month, let alone the actual healthcare costs. So that’s crazy. You had brought up taxes. So now obviously if you’re going to have universal healthcare, you’re going to have these benefits. It comes with a higher tax rate. Can you talk us through what they’re around there and what people can expect moving over and staying for more than 12 months?

Tommy Sikes, CFP®:
15:28

Sure. And this is again, a pushback. I get a lot for like my YouTube videos where people are like, Oh, why would I want to go to Italy and pay, 25 percent income tax rate? And it’s yeah, but now you got to back out, like you mentioned, you got to back out your monthly insurance premium of 1200 dollars or what, whatever it is. Public universities are free for residents. A lot of education is free. All the public transport is subsidized, there’s a cost, but anyway, there’s a lot of benefits. I could get on that soapbox, but You have to think about it 2 ways. I’ll talk about general income taxes and then bring me back because Italy has a special incentive for to get people to move to Italy tax incentive. So bring me back to that. But in France and Italy, tax rates, income tax rates. Higher than the United States. I think everybody understands that, but if you’re only looking at the rate, that’s only part of the equation. If you consider the cost of living, that is the other part of the equation. Say in Italy, you don’t go to one of the places where you can get the special tax rate. The taxes range from 23 percent to 43 percent on income, and it’s progressive like the United States. So you’re first. First X amount, 23, then it’s 25, then I think it’s 31. And then anyway, it goes up from there. The rate again, considerably higher. If you can live on 24, 000, 30, 000, number one, you don’t have to have as much saved. Again, they don’t it’s not like you move over there and your U. S. Social security gets adjusted down because the cost of living over there is lower. It’s the same. Your dollar is going to go a lot further. so You can live on a lot less, which means your income is going to be your gross income is going to be a lot less. You can pull a lot less money. Yeah, France is similar. The progressive rates again, start around 20 percent go up to about 40 40%. But again, same thing. Tons of services, universal health care, public transport, just a lot of stuff included, but again, lower cost of living. So I was actually doing some numbers before we came on. I saw somewhere online that to live in the United States comfortably. anD again, I don’t know the, I think it’s from smart asset. I don’t know the basis for the, the exact survey question, but it basically the answer was around 68, 000. Net, so before, after taxes in the United States to live similarly in Italy, you would need about 30, 000. So that’s less than half. So now if now, if you then add in the, what you would need gross for taxes, I was calculating it. So that would mean you would need about 87, 000 in the U S and I just use like a 20%, Real average tax return tax rate 42, 000 in Italy. So again, now we’re talking, yes, your tax rate is higher in Italy. That 42, 000, you’re going to lose more of that in a percentage to taxes, but you only have to have 42, 000. You don’t have to have 87, 000. And that’s where I think a lot of people let the tail wag the dog when it comes to taxes is there I can’t imagine the feeling of giving the government, 35 percent of my income and it’s yeah, but it’s on half the income that you would have to pay. In the United States. And so the actual tax you pay might be about the same, if that makes sense. Yeah. So

Stoy Hall, CFP®:
19:24

that’s what you said. It’s going to stretch out your dollar be able to last a lot longer in it and as we know, in a healthier society, it’s just being real, we’re not even going to get into the health rates and all of that stuff, but that’s a huge piece of it too. And we’re not going to dive too much more on taxes, but everyone’s going to be like aren’t I getting taxed in the United States too,

Tommy Sikes, CFP®:
19:43

on top of it? Yes, exactly. And, obviously, if you’re doing IRA distributions, ordinary income tax rates social security can be taxed depending on how much money, extra money you have. But again, if we’re talking about living on, you got to live on 50, dollars, the United States, you’re going to have some more. There’s going to be some money having to come in from somewhere else other than social security. Oh, yeah. Let me come back because I mentioned it and I didn’t want, I don’t want to tease people. So Italy has a flat 7 percent income tax. Program basically, there are 8 regions, mostly in the South of France. If you look at a map of if Italy and Rome, which is midway down from there, pretty much to the South all of those regions. If you relocate to Italy, um, you have to move to a town or village that has. 20, 000 people or less, which are some of the most beautiful, these like hilltop, classic Italian, towns that you think of, um, you can qualify for 10 years to pay a flat 7 percent tax on your income. That’s it. Years. 10 years, so the year you arrive, whatever, how many, however many months is left in that year and then 9 additional years. And then at that point, it reverts just to, regular income tax rates, but the south of Italy, south of France too but Italy, especially over the past decades has had this massive migration of younger people. Moving out of these rural, villages and towns moving to the north of the country, where the majority of the industry is Milan and turn people think of Venice that’s all up in the north, near the Alps. So they’ve had this massive immigration or migration issue, I should say and to incentivize people like Americans, there’s a ton of UK expats there. It doesn’t matter what country you come from, but if you have a passive income from another country, so social security from the U S or it could be just your investment returns. You can move to these regions and to again, 20, 000 sounds like small town. My town in North Carolina, I think there’s 9, 000. And we have everything we have grocery stores, we have shops, we have bars and restaurants. So it’s not like you’re. Moving into, nowhere anyway, but you can do this and again, qualify for this tax regime, which for 10 years, 7 percent income tax, as opposed to the again, 30 or 40 percent that I mentioned earlier. So it’s a huge deal again, if you want your dollars to go further, low cost of living, flat tax rate, Mediterranean climate, food, wine. Love Dolce Vita, the suite life in Italy France, again, the same things, France just doesn’t have the incentive it’s France. Castles, rivers, vineyards, I don’t have, I don’t have to pitch it. Yeah. bUt yeah, that’s a huge, that 7 percent tax rate thing is massive in Italy. So if

Stoy Hall, CFP®:
22:59

you’re, everyone listening and you’re thinking about it, your toes are dipping in the water, one, reach out to Tommy, but two, plan for it. It ultimately is and running the numbers off the top of my head, going to be a benefit for you if this is where your heart desires, right? Like you had said, this is more of an emotional thing. I want to live there. I want to live this life. If you are going to, There’s pathway to doing so as Tommy mentioned the first 12 months go rent figure out where you want to be It also buys you time for the health care and for the mortgage situation Figure out what you want to do and then don’t worry about health care because you’re good to go in that regard and taxes again it is a conversation that is to be had but it is not like the United States You would have less income needed Therefore, you’re probably paying roughly the same tax rate. So Tommy, I appreciate it. What do you want to leave everyone left? Listening with what do you want to leave them with right here before the

Tommy Sikes, CFP®:
23:53

holidays? Just to follow up on what you just said that it’s not honestly, it just takes a little research. I’ve done a ton myself just because I’m fascinated with this. There’s a lot of information out there. Not all of it’s true. So make sure you do again, double check if you hear. Rumors about, various things, numbers and cost of living and things like that. You want to double check that put together of a financial plan does not have to be super complicated. It’s better to be approximately, correct than trying to get every little minutiae detail. Perfect. Because. You can, we want to generally say, Hey, is this a go or a no go? Is this something feasible? And if it is like doing a plan, you can be like, oh my gosh, I can retire. Five years earlier than I thought, or I can, I don’t have to worry about trying to get an extra job to make ends meet, I can actually be retired and live that life that I’d been thinking about again, a plan is going to. Not only show you the numbers, but it’s going to give you the confidence to, to to again, move forward. And that’s what I want. I want people to feel empowered to take action. And it’s important to do that with a plan. You heard it here first.

Stoy Hall, CFP®:
25:05

Take action, everybody.

Tommy Sikes, CFP®:
25:20

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