My siblings made aliyah a few years ago and my wife and I both have cousins in Israel. Any time we speak to my family in Israel they ask when we are moving. After years of deliberation and the rise of antisemitism in the United States, my husband and I have decided to make aliyah with our children. Do you have any advice on the financial considerations associated with making such a move? This is a big decision for our family, and we want to make sure that we are financially responsible. – Anonymous
A version of this question comes up often in my practice. Especially after October 7, 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. I applaud the questioner’s desire to ensure that their finances are in order prior to moving. 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 have a few hundred words, so I will briefly share some of the important preliminary financial considerations prior to going on aliyah. Hopefully they can serve as a good starting point:
Hire a specialist to help: I’ll start by stating the obvious. There are a myriad of decisions and financial planning nuances when it comes to making aliyah. Frankly, I am not even an expert on all the different areas. 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.
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:
Early/mid-career professionals: If you have at least a couple decades until you retire, your focus should be on how you will be able to earn a livable wage. Many friends I speak to 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.
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 as well.
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.
Buy or rent a home: This is another topic that I discuss with my frum clients on a regular basis. There is an understandable desire to want to own property in the Holy Land. However, this decision should not be at the expense of your financial security. This conversation is also different depending on the stage of life of the individual:
Early/mid-career professionals: Presumably, if you have a long career and life ahead of you, along with a substantial pile of cash and a healthy income, then buying a home in Israel may make sense. Presumably, owning a home in Israel for several decades will allow it to appreciate modestly in value (hopefully keeping up with inflation) and over time you may be able to sell this asset when you downsize in retirement.
However, I would encourage folks not to rush into purchasing a home. It’s sensible to rent first until you decide where you want to live. On many occasions, families bought into a new development, only to decide after years of delays and additional costs, that they are no longer interested in living in that neighborhood. Home purchases are a big decision. Kal vechomer, a home purchase in a foreign country. Don’t rush things. This is not a race.
Retirees: The conversation with retirees is different. I often get calls from folks who are wondering if they should liquidate 30-50% of their nest egg to buy a home in Israel. The answer is usually the same: ABSOLUTELY NOT! Wiping out a significant portion of your nest egg to purchase a house in Israel is almost always a terrible idea and can be a financially devastating decision. This is especially true given the very attractive rental market in many Israeli neighborhoods. Yes, your landlord will increase your rent over time. However, if you have a sufficient nest egg then you will be able to easily absorb any price increases. I would encourage folks to speak to their financial advisor to help determine if buying or renting makes sense for you and your family.
Investment assets: Deciding where to locate your investments may depend on a variety of factors including convenience and tax and financial planning strategies. In my experience, folks with U.S. sourced income or a large nest egg already at a U.S. financial institution have not moved all their funds into Israel. While I can’t discuss the nuances of the Israeli system, in which I am not an expert, I can speak to the benefits of the U.S. system, which should not be taken lightly.
American investors have many competitive advantages over other countries. There are numerous financial institutions to choose from with competitive and differing fee structures. The investment products available in the U.S. are plentiful, varied, and usually liquid. The U.S. banking system is transparent and regulated, so folks can feel confident that their funds are secure. There are also many tax efficient ways to invest your funds utilizing proper accounts and strategies, which may be beneficial if you have a U.S. based job or other taxes due in the United States.
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 reading 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.
The key to a successful aliyah: Making aliyah is a major, life altering decision and it’s certainly not easy. Don’t let anyone try to convince you otherwise. Living in our ancient homeland is a beautiful and rewarding experience. At the same time, challenges will arise with dealing with one’s finances and the culture shock to which you will need to get accustomed. The honeymoon period after making aliyah is brief and the reality of day-to-day life will set in very quickly. When you move to Israel, you are not going on vacation. Much of your time will be spent in the same ways you currently spend it in the U.S.: errands, work, and life routines. You will just have the added challenge of a language barrier and a new environment. No amount of preparation can make this adjustment completely seamless.
I have found that the folks with the most successful aliyah experiences share one thing in common: They’ve had the burning desire to want to live in Israel for many years. The folks that move to Israel on a whim or because of social pressures may not last over the long term. An unshakable desire to live in Israel needs to come from within. Ultimately, this burning passion will make all the speed bumps along the way, financial and otherwise, much more manageable.
Wishing you much mazal and hatzlacha with your aliyah journey!
