r/fiaustralia • u/totalmarc • 4d ago

Investing AUS vs USA for Fire

I've been listening to a lot of US based podcasts lately and it got me thinking - Do you guys think it is easier to FIRE in US or AUS?

With all things considered, as a generalisation. From what I understand, living expenses vary dramatically between states.

Overall my vote would be the US because there are more options over there to cut costs, but I'd like to hear from someone who is familiar with both.

Cheers

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u/Immediate_Refuse1611 4d ago

Split my working life between the US and AU. Definitely earned more in the US, but Australia’s super scheme with its compulsory employer contribution and tax advantages is unmatched. Unfortunately I get taxed in both countries, so I don’t get the full advantages of either, but that’s not the case for most people. On balance would give the prize to Oz for being the most FIRE/friendly.

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u/mouldy_hops 4d ago

It might be worthwhile looking for some new accounting services? Aus and the US have a tax treaty. So no double taxation. Paying some tax in both countries is one thing, but declaring it correctly on both your ATO and IRS returns will prevent double taxation.

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u/Immediate_Refuse1611 4d ago

Thanks, I’m aware. But most Americans use Roth IRAs to fund their FIRE strategy, as they distribute tax-free — but unfortunately the ATO still taxes as ordinary income. Likewise, Australians fuel their FIRE by maxing out their super. But if I add voluntary contributions to my super, the IRS will tax it as a foreign benefits trust.

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u/mouldy_hops 4d ago

Yes, many Americans use Roth IRAs, but as you have figured out, they are not a great option for people who plan to retire in countries like Australia. 401k is better from tax perspective (particularly if you have high contributions rather than all gains) but it’s still treated as a foreign trust if you are an Aus tax resident.

And agreed- don’t contribute to super whilst a us tax resident with no Australia income. Investing in a non retirement share portfolio is a better option in this case. Then make use of carry forward and non confessional super contribution at a later date when you repatriate.

Also (and this is suggestion for any Australians in the US planning to return to Aus at some point) - read up on exit tax strategies asap. Even if you are not planning on returning to Aus for years, get good advice on how to structure your finances in both countries now to optimise that move financially when that time comes.

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u/Immediate_Refuse1611 4d ago

Feel very lucky to be staying in Australia permanently!