I’d like to start a new video series discussing Financial Considerations Before Making Aliyah.
Especially after October 7th, it seems that the motivation to move to Israel has increased for Jews around the world. However, rushing into such a major life decision without proper preparation and due diligence is imprudent and ill-advised. The right fiscal preparation before moving to Israel can minimize stress levels and help contribute to a successful aliyah experience.
There are hours of lectures and volumes of books that would be needed to discuss all the financial considerations for an American moving to Israel. I only plan to dedicate a few short video clips to this, so I will share some of the most important preliminary financial considerations PRIOR to going on aliyah. Hopefully they can serve as a good starting point:
The first is to hire a specialist to help: There are a myriad of decisions and financial planning nuances when it comes to making Aliyah. This is further compounded when families of means need to update their planning to reflect the international nature of their financial holdings and beneficiaries. It behooves all families, but especially folks with a lot of assets, to speak with an estate planning attorney and tax accountant who specialize in these cross-border issues. Failure to do so can wreak havoc within your finances, especially for your loved ones after you pass away.
Next, let’s discuss income and expenses.
When it comes to Income: The first fundamental question to ask yourself BEFORE moving is how you plan to support yourself. Waiting to figure this out after you move will lead to significant stress and may jeopardize your ability to stay in the Holy Land for the long term. The answer to this question depends on your stage in life:
If you are an Early to mid-career professional: You likely have at least a couple decades until you retire and your focus should be on how you will be able to earn a livable wage. Many friends I speak with plan to work for a U.S. based company, earning their American salary, while working on U.S. hours. Earning an American salary while in Israel can put you on excellent financial footing. The trick is getting accustomed to working from late afternoon until midnight.
Other folks try to get a job in Israel. This is also a fine approach. The trick is finding a position that will pay you a livable wage to support your family. It may be more difficult to navigate the Israeli job market compared to the U.S. if you lack connections, army experience, and Hebrew language proficiency.
It’s also quite common for folks to have multiple jobs in order to support their family. Any of these options can work. The key is having your income producing activities established before moving and ensuring you are earning enough to support your family.
Next is for Retirees: Folks that are on the cusp of retirement or in retirement may be in a better financial position. Assuming they spent years saving for retirement, they can presumably live off their nest egg and use their social security paychecks to supplement this income. It’s important to work with your financial advisor to determine your “safe withdrawal” rate, or how much money you can withdraw from your portfolio without the risk of running out of money and possibly being able to achieve one’s legacy goals.
One of the biggest challenges facing retirees in Israel is the same one that impacts retirees in the U.S., which is how to spend one’s time. It’s essential to develop a daily routine, social network, and to stay engaged mentally. Volunteering or a part time job can solve this issue and be immensely beneficial on many different levels. In addition to developing a plan on how to safely spend your nest egg, it’s imperative to determine how to spend your time.
Now, let’s discuss Expenses: There are a whole host of expenses that vary when folks make aliyah. Reduced yeshiva tuition and healthcare costs are a huge relief for many families. There is also a myriad of other costs that may rise, like certain types of food, big purchases like automobiles, and income tax. There may be people listening to this who are compelled by the level of expenses in Israel vs. the United States, which is understandable. Living in the U.S. is certainly not cheap, and the costs contribute to many stresses in life. However, for most people, making a move to Israel should be about more than just saving on certain expenses.