Expat guide to retirement

Expat guide to retirement

Retiring on your terms is the ultimate aspiration, but careful financial planning is crucial to achieve the retirement you want, when you want.

The demographics of retirement are changing. As people live healthier, longer lives than ever before, more ambitions are also being realised for later life.

While some expats choose to return home in retirement, their experiences of life abroad may convince them to remain overseas. This could be either in the country in which they've been residing, or a different country that might offer an improved quality of life, a better climate or allow them to be closer to family.

Many are now looking for flexibility in retirement, which could include more extensive travelling and homes in different countries. It could involve more adventurous activities that they were unable to pursue when working, due to time constraints or having young children in tow.

When to retire is also important; perhaps you feel that you would like to retire early, for example.

Whatever your retirement aspirations may be, the most crucial factor in realising them will be good planning. Starting early could be key in giving you enough time to weigh up your options and decide what you will need to do to make each goal happen.

Read the latest Future of Retirement report for more on how people are spending, and saving for, retirement.



"Whatever your retirement aspirations may be, the most crucial factor in realising them will be good planning."

Later life locations

When thinking about saving and investing for retirement, it's important to consider where you plan to retire to, along with how income from your retirement savings will be taxed in retirement.

Look into the cost of living in your new country and tax implications in both your home country and adoptive country. You might be in the situation where you have moved to various countries throughout your working life, holding retirement savings in each. Consolidating these could be a key consideration. However, this can be very complex and professional advice may be crucial.



Investing for retirement

Offshore investments may work for some people living and working abroad, as they can be held in a central location while you move around the globe. They could make it easier to manage your investments as they could be all held in one place, rather than scattered around in different countries.

Property has been an attractive form of investment for many over the past few decades. A buy-to-let house property could produce a regular source of income or provide a home for you or other family members at a later time.



It's all in the planning

The earlier you start, the less onerous saving for your retirement is likely to be. You may also be able to afford to take greater risk with investments the further away you are from retirement, as temporary shortfalls caused by fluctuations in the market can be smoothed out over time.

As you approach retirement age, this is usually the time to consider apportioning more of your wealth to less risky asset classes, such as cash or bonds. If you don't feel ready to retire - either from a financial or career perspective - you may be able to carry on working for longer, and supplement the income from retirement savings.

There will also be the need to think about protection planning; this will mean considering how the wealth you have built up for retirement would be protected should an emergency situation occur, such as critical illness.

Retirement planning is often complex and all the more so for expats. With the changing nature of retirement, financial planning is increasingly vital to maximise opportunities and income in later life.

By starting your retirement planning early, you're likely to have a better chance of being able to afford the lifestyle you want when you retire.

The value of investments (and any income from them) can fall as well as rise and you may not get back what you invested. For some investments, this can also happen as a result of exchange rate fluctuations as shares and funds may have exposure to overseas markets. Investing should be seen as a medium to long-term proposition of at least five years.

Your home or property may be repossessed if you do not keep up with repayments on your mortgage. You should always think carefully before purchasing a property. The value of a property is a matter of a valuer's opinion and not a matter of fact. Not all properties will grow in value, while a buy-to-let property may not provide sufficient income to cover all your associated costs. Property can also be difficult to sell and you may not be able to sell quickly if you need to do so. Availability of mortgages will vary depending upon your country of residence.

The value of tax treatment will depend on your individual circumstances and may be subject to change in the future. Tax rules differ from country to country. If you're unsure about your tax commitments, you should get professional advice. It's your responsibility to disclose your income to the tax authorities.

Sources
HSBC Future of Retirement Report - hsbc.com (2015)
Buy to let as a source of retirement income - ftadviser.com (June 2015)

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