Best Retirement Planning Advice For Expats
Expat Retirement Planning Abroad
Expat life has many financial advantages
Being an expat can be extremely rewarding. New cultures, experiences, warmer climates, better pay! A salary increase is often a key reason for moving abroad in the first place. You are likely paid more than your friends back home in comparable positions. That is because you have relocated to a part of the world where your skills are in higher demand. You may also be paying less income tax than at home. Your disposable income is also increased by the fact that international companies do not force you to save into a company pension. Your financial situation seems perfect!
Why do Expats need Retirement Planning?
You must take responsibility for your financial future
We have seen hundreds of expats situations, and the recurring theme is a lack of sufficient retirement planning. Your employer abroad rewards you handsomely for your work, but there is no company pension or long term retirement investment in you. Multinationals in South and Far East Asia and the Middle East have seen Final Salary pension scheme deficits in Europe and the UK and do not wish to have workplace pensions and ongoing obligations to you in your retirement. Companies abroad prefer to remunerate you well but then have no responsibility to you after that. If you want to reach financial freedom you will need to take control of your retirement planning abroad. It is no longer feasible to think your employer or the state to look after you in your golden years.
Why do Expats earn more but save less?
Their transient career-path makes retirement planning abroad tricky
Expats typically move company or location more than the average employee. It is because they enjoy living in new places and experiences and their skills are in high demand. Either way, this transient lifestyle of moving company or city takes a toll on your savings. You might need to break or put on pause the consistency of your monthly saving. It can happen as you open and close bank accounts in each country or leave accounts open in your old countries. Consequently, despite earning attractive salaries, many expats approach their retirement years and realise they lack funds for their retirement plans. This means one of two things. They will either need to start saving a high proportion (60-70%) of their disposable income to fix this retirement shortfall. Alternatively, they might need to continue working longer than planned, for example, until age 65 instead of 55. expatwealthatwork has seen this situation, time and time again. When expats do not tackle retirement planning early, they can end up having various pension pots of capital spread across numerous countries in different currencies. The accumulative value of these pots can be significant and should have been managed collectively in one place. If you have pension pots in Europe and/or the UK, you can contact us without any obligation - email@example.com - to learn more on a Final Salary Pension transfer or a Defined Contribution Pension transfer.
Best solution for the Retirement Financial Problem
An Internationally Portable Retirement Plan for Expats
Once you adopt a good habit of saving consistently, you have the best of both worlds. You earn more than you would back home, and you are also protecting your future. Saving is a habit which can be hard to put in place, so maintaining this is easier when you do not have breaks or pauses. It is like going to the gym, once you get into the habit you enjoy it again. That is why all retirement planning solutions we offer are internationally flexible. Our expat clients can continue saving for their future no matter what changes may be occurring in their life. The other benefit is that you do not need to open and close a new account each time. Your retirement plan stays open and flexible.
Our Retirement Advice Flow
Simple and Straightforward
- Contact Us
- Situation Analysis
- Solution Appointment
- Complete Application
- Ongoing Reviews
Advantages of Expat Retirement Planning
Reaching retirement or early-retirement with financial freedom is an achievement. You can enjoy your adult years while you are still young and spend more time with your family and grandchildren. Once you set your goal of what age you would like to retire, 50, 55 or 60 you have a clear objective to reach. Usually referred to as the Law of Attraction, which translates your thoughts and ambitions into reality.
Sitting your boss down and explaining that you no longer need to work to provide for your family turns the tables upside down. Your employer may need you more than you need them for the first time in your career. You are likely a valuable asset to your company. They have invested significant time and company resources in your growth. You know your role, and you have a large amount of sector experience. When announcing early retirement plans, many of our expat clients received incentives to stay. Most commonly the same salary but with fewer working hours, responsibilities or the ability to work from home a few days a week. Everyone knows their industry and employer better than anyone but having the freedom to have this discussion can be a massive shift in power.
Your expat retirement planning solution will grow tax-free, so you benefit from the compounding effect of interest on your savings and this compared to saving with a European or UK high street bank, where you will be charged 10%, 20% or 33% tax on any growth above the allowance. Growing tax-free does not mean that you do not have to pay any tax at all. You will be charged tax when you withdraw the growth from the retirement plan. However, this could be many years from now when you may be living in a more tax-efficient location. Importantly though, you will have earned interest and growth on all the tax that has remained inside your retirement plan.
Greater Access Than Your European and/or UK Pension
You cannot access European and/or UK pensions until your respectively 65th (67th from 2028) / 55th birthday (57th from 2028). With a private retirement plan, you can access the money before 65/55. It gives you greater flexibility. Many clients who wish to retire early set a private pension in place to mature at age 50.
Portable Retirement Planning
Moving country no longer needs to be a headache for you financially. Your retirement plan will remain in force, allowing you to continue making contributions without need to change or update anything. This consistency makes the difference in achieving your financial goals on time, as opposed, to needing to delay your retirement plans. This flexibility also means that should you return to Europe or the UK, which is likely, your retirement plan can move back with you.
Disadvantages of Expat Retirement Planning
The terms financial freedom and passive income are overused. Financial freedom normally comes from working hard and being astute with your money. There is no get rich quick solution for your retirement. Starting a retirement plan is a commitment to your future. Saving for a few months and then taking a break for a few months indicates an unwillingness to commit to this goal. Therefore, retirement planning might not be suitable for you if you do not intend to maintain your contributions over time.
You have greater access to your capital than a European and a UK pension. However, making early withdrawals or even full encashment may not be in your retirement interests and may incur a penalty. At worst, the initial set-up costs of your retirement plan would make early withdrawals counterproductive unless there had been a significant level of growth in the first years of the plan. We advise a retirement planning solution to be used for a minimum of 5-10 years. A structured retirement plan will almost certainly have high exit penalties if you decided to close the entire plan early.
How much should I save for retirement?
This will depend on two keys factors
The first factor is what level of income you will need as an expat in retirement. For expat clients already living in their country of retirement, this is easier as you already know what your monthly expenses are. For those, residing elsewhere, you must try to complete an accurate estimation. The second factor is what amount of money and pensions you have already accumulated. This is more straightforward and involves totalling the value of your existing pots. expatwealthatwork has years of experience in helping expats create estimates for countries all over the world. We also help expat clients err on the side of caution, so we are allowing for any unexpected expenses or costs. Whatever your situation might be, we have likely seen a similar situation before. We may even have an existing client residing in that specific location for you to help you formulate your strategy.
When is the best time to retire early for you as an expat?
This will hinge on how prudent you have been with your savings
Accessible financial planning was not available to the past generation of expats. As such, despite earning excellent salaries, many expats who left their home country in the 90s and 00s are reaching 50-55 years only to realise they have insufficient retirement planning. In the majority of instances, this does not cause significant financial problems; it just means they have to continue working.
Expats in our current generation are taking advantage of technology to save from anywhere in the world. Many of our clients in their early 30s are well on their way to early retirement by implementing structure and discipline to their retirement planning from an early age in their career with retirement contributions scheduled for the day after their salary.
I already have an expat retirement plan
We provide a free review - Advising changes to improve your plan
We understand many expats will have already taken out some form of regular savings or lump sum investment since living or retiring abroad. We will review these plans and provide you with a free financial advice report on what can be done to improve the performance of your portfolio. This financial advice is confidential. Confidentiality is valuable for clients as it allows them to have a second opinion on their portfolio without any commitment to changing adviser. The worst-case scenario is that clients become more educated and informed about their existing retirement plan.
What is my state pension worth? How do I access my state pension living abroad?
The system allows you to receive payment in any account globally
The actual amount of the state pension you will receive will depend on your contributions. You must have a certain period worth of contributions to receive any form of state pension and/or to qualify for a full state pension. We can help you access your records and how many years of contributions you have. Expats moving abroad from their home country at retirement will likely have a large number of years of contribution. For younger expats, you have the choice of making voluntary contributions while you live abroad. It would be best if you discussed this with us. Receiving payment from your home country is simple. You advise them of your account details anywhere in the world, and they will complete your state pension. As an expat, it may be more cost-effective to have this paid to your home country account to avoid conversion fees.
What is the Best Retirement Plan for Expats?
Your attitude and goals will define this
In our experience, expats saving for their retirement come in two categories. The first category is those who enjoy saving and are 100% on top of all their savings and investments. They typically take a greater interest and enjoy rigorous discussions with us regarding portfolio allocation and decisions and do not need an incentive to save. They do it automatically every month no matter what changes in their life or career. The second category is those who are successful at work but do not always find the time to analyse their retirement plans. They have the ability to save but need a nudge in the right direction. They prefer a more structured commitment to instil continuity in their retirement planning. Whichever category sounds more like you; we have the correct solutions to match your requirements. Book your consultation to learn at what age you could retire: firstname.lastname@example.org