On February 25 Webinar we held a Webinar entitled “Can I Afford to Retire in Israel”. The panel consisted of Rifka Lebowitz– “Living Financially Stronger in Israel”, Marci and David Eskenazi- “The Aliyah Network”, alongside Norman Chait and Mike Reed of Nardis Advisors.  Here is a summary of the issues that were most important to the participants, plus ten key questions from the webinar attendees. 

But first, if you’re new to life in Israel, check out our other helpful reads on moving abroad, cross-border finances, and tax-smart planning for expats:

What to do when you get kicked out of your US brokerage account

Can one use a US Power of Attorney in Israel, (and vice versa)?

Immigrating to Israel

A guide to retiring in Israel

Checklist for moving to Israel

A guide to investing abroad

Israel expat case studies

Social Security for expats

Financial planning for US citizens living abroad

Selling a house in Israel as a US citizen

Why US Expats should look before they leap into a Roth 401k

Compliance with reporting of foreign assets: tips for US expats to avoid stress

What expats need to know about Brokerage Accounts for non-US residents

And now let’s get into the blog!

Key Concerns from Webinar Participants

The audience focused most of their questions on the following five areas:

1. Financial Requirements to Retire in Israel
   Participants were eager to understand the overall cost of retirement in Israel, including housing, utilities, healthcare, and senior housing options. Many questions reflected a desire to determine whether their savings and retirement income would support a comfortable lifestyle.
2. Healthcare Considerations: Healthcare questions centered on whether Americans should maintain U.S. Medicare coverage while enrolled in Israel’s healthcare system, as well as the cost and availability of supplemental and private insurance. Access to English-speaking doctors was also a frequent concern.
3. Tax Exemptions for New Olim and How to Navigate Them: The largest number of questions focused on understanding Israel’s 10-year tax holiday for new immigrants. Participants were particularly interested in how the rule works in practice, which types of foreign income qualify, and how financial planning should change once the 10-year exemption period ends.
4. Taxation of U.S. Retirement Assets:
   Many attendees sought clarity on how IRAs, 401(k)s, Roth IRAs, pensions, and Social Security are treated for Americans living in Israel. Questions reflected concern about whether these accounts maintain their tax advantages and how withdrawals are taxed in both countries.
5. Navigating Dual US–Israel Tax Obligations:
   Participants expressed significant uncertainty about how the two tax systems interact. Common concerns included ongoing US filing requirements, how the US–Israel tax treaty applies, and whether income might be taxed by both countries.

Top 10 Questions from the Webinar Audience – With Answers!

1. Q: How Much Does It Cost to Retire in Israel?
What level of savings or monthly income is required for a comfortable retirement, and what are typical living expenses such as housing, utilities, and property taxes?

A: This is different for everyone, but here is a general governing principle, can you afford to retire – period? If the answer is yes, then it is highly likely you will find a community in Israel where your retirement living costs are similar to or lower than those you would incur the US. 

2. Q: What Healthcare Coverage Is Available in Israel?
What are the healthcare options for Olim, including Kupot Cholim, supplemental coverage, private insurance, and access to English-speaking doctors?

A: Healthcare coverage is universal in Israel. Everyone will be registered with one of the four Kupot Holim (HMOs) in Israel. The decision as to which is which offers the most comprehensive service where you plan to live. The Kupot Holim also offer certain premium services that are recommended. Private insurance covers those areas that are not covered by the Kupot Holim. 

We realize this is a key concern for people making Aliya, and while this is not an area of expertise, we will note that healthcare coverage here is decent and affordable. We suggest doing you own research once in Israel to learn from fellow Olim about which doctors are recommended, and where they are more English-speaking doctors. 

3. Q: Should Americans Living in Israel Keep Medicare?
Should Americans continue paying for U.S. Medicare while enrolled in Israel’s healthcare system, especially if they plan to visit the U.S. periodically?

A: This is simple math between the ongoing cost of Medicare versus the cost of purchasing travel insurance from Israel if you decide not to take Medicare. Factors to consider include your age and how much time you intend to spend in the US each year. Please note that if you intend to apply for Medicare, you must do so at age 65. Applying later carries steep fines and ongoing higher Medicare monthly bills. 

4. Q: What is the 10-Year Tax Holiday for New Olim?
How does the 10-year tax exemption work for new immigrants to Israel, and how does that apply to foreign income and investments?

A: This rule exempts all forms of foreign earned active and passive income from taxation in Israel for the first ten years after Aliyah. You would still need to pay taxes in the US. Please note that any work performed in Israel during this period is taxed in Israel.

Once the ten-year tax holiday ends, then Israel become the tax domicile and Israel has the right to tax most forms of active and passive income first, including US-based taxable investment accounts and retirement distributions. The tax treaty with the US would ensure that there would not be double taxation. For example, if the US elects to tax on dividends, or withhold a certain portion of one’s retirement distribution for tax, then one would get a tax credit in Israel and in so doing avoid paying double tax.    

5. Q: How Are U.S. Retirement Accounts Treated?
How are IRAs, 401(k)s, Roth IRAs, and private pensions taxed for Americans living in Israel, both during and after the 10-year exemption period?

A: These would all be taxed in the US only for the first ten years. After ten years, Israel becomes the tax domicile. Some pensions are taxed by Israel at the original US tax rates, and some are not. Please note that it is not clear whether Roth IRAs distributions would be taxed by Israel after the ten-year tax holiday is over.  

6. Q: How Are U.S. Social Security Benefits Taxed?
Under the US–Israel tax treaty, how are Social Security benefits treated for Americans residing in Israel?

A: Social Security is not taxed either in Israel or in the US, for residents of Israel. This is significant. So, if you are receiving your social security in the US. Please make sure that your US CPA does not take social security into account for your US tax bill. Please also note that it is possible to receive your monthly social security payment to your Israeli bank in shekels. In most cases, we believe this to be convenient. 

7. Q: What Are the Ongoing U.S. Tax Obligations for Americans in Israel?
Do Americans living in Israel still need to file and pay US taxes, and how do the two countries’ tax systems interact?

A: US citizens need to file US tax returns irrespective of whether they live and whether they owe taxes to the US or not. The US threshold for not filing taxes is the same whether you live in the US or elsewhere. It does not matter where you earn the money and/or pay taxes in your country of residence. It is possible for example that you file a US tax return and pay no US taxes. There is a filing obligation regardless, and fines for non-compliance.    

8. Q: Should Individuals Consider Roth Conversions or Other Tax Planning Strategies?
Is it advantageous to perform Roth conversions or before or after making Aliyah?

A: There is no advantage to making Roth conversions prior to or after Aliyah. While opinions differ, it is not clear whether Israel would tax Roth IRA distributions. Therefore, we do not think it makes sense to contribute after tax dollars to a Roth IRA, as you may land up being taxed twice.  

9. Q: How Should Investments Be Structured Between the U.S. and Israel?
How should Olim manage investment portfolios across both countries, including currency exposure (USD vs. shekel), regulatory constraints, and investment vehicles?

A: Upon making Aliyah, one does not have to move one’s investment accounts to Israel. In most cases it may be better to keep your investments in the US and transfer money to Israel in dollars or shekels as needed. If you use a financial advisor, then they should be able to perform this function for you. There are also third-party currency conversion services, but we do not endorse any. 

US citizens resident in Israel may open local investment accounts. However, one should not invest in local Israel-domiciled mutual funds, ETFs, or any other pooled investment vehicle, as these may to subject to a costly US Passive Foreign Investment Corporation (PFIC) tax. One may hold individual stocks and bonds without incurring this tax. 

Most Israeli investment management companies, and investment department at major banks, are not aware of the specific tax constraints on US Olim, and therefore it is important to work with a local investment advisor who understands the specific investment needs of American citizens in Israel.

This is an area of specialty for us so please reach out for more details.      

10. Q: What Legal and Financial Planning Steps Are Needed When Relocating?
How should individuals handle trusts, wills, bank accounts, and existing financial arrangements when transitioning from the U.S. to Israel?

A: Please note the following two principles: Powers of Attorney do not cross borders and they expire upon death. In other words, one should plan for both succession and future incapacity. 

One should set up an Israeli will, as this can govern most US assets. Certain assets outside a will, such as trusts, and US retirement accounts (401K and IRA) are treated separately. Should one decide to have a US will too, then it makes sense that it synchronized with one’s Israeli will.   

Should one become unable to run one’s own affairs, then we believe it makes sense to set up separate durable powers of attorney both in Israel and in the US. A US POA should be resident in the US, but we have been able to get the investment custodians we work with to allow for a US Citizen resident in Israel to also fulfil this role.  

Thinking About Moving to Israel?

You don’t have to make a radical, all-or-nothing decision overnight. But if the idea has been on your mind, we’re happy to chat.

Whether you’re:

• Planning retirement in Israel,
• Exploring dual-continent work,
• Or just curious what the day-to-day is like here,

…feel free to reach out. We’ve also published the following blogs you might find helpful:

• Checklist for moving to Israel
• Immigrating to Israel
• A guide to retiring in Israel

Let’s Talk!

We’re financial advisors for expats, both in the U.S. and in Israel, and can help you plan your transition wisely. Whether you’re balancing U.S. assets, managing remote income, or figuring out healthcare and retirement, we’ve helped dozens do just that.

If you are moving to Israel or another country and don’t know where to start when it comes to the financial side of things, please contact us.

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Disclaimer

Nardis Advisors LLC (“Nardis”) is a Registered Investment Advisory Firm regulated by the U.S Securities and Exchange Commission in accordance and compliance with applicable securities laws and regulations. Registration does not imply a certain level of skill or training. Nardis does not render or offer to render personalized investment advice through this medium. The information provided herein is for informational purposes only and does not constitute financial, investment or legal advice. Investment advice can only be rendered after delivery of the Firm’s disclosure statement (Form ADV Part 2) and execution of an investment advisory agreement between the client and Nardis.