Planning for retirement as an expat can be difficult, especially if you’ve lived and worked in several foreign countries.
It’s always best if you start thinking about it early on. That way, you’ll have much more time to consider all your options and find a way to bypass all the difficulties you may encounter along the way.
Since there are numerous factors you need to take into consideration, you might even want to consider hiring a financial planner to guide you in the right direction.
Here are the most important things to consider when planning your retirement as an expat.
Where Will You Retire?
Retiring as an expat is easier in some countries than it is in others, and many of them offer great retirement packages for expats, which can help boost your savings. Moreover, many countries have social security deals with others, which make it possible to transfer your pension funds if needs be.
So your first step in making a pension plan is figuring out if your home country has an agreement with your expat country. For example, if you want to transfer your Australian pension, this may prove to be difficult as the country doesn’t allow for transfer to any overseas pensions, except to New Zealand. You would need to figure out a way around the problem.
You also need to find out if you’re eligible to retire in the desired country at all, so make sure you understand your pension rights in the country where you reside.
If you have several different pension pots, make sure to monitor them all closely and consolidate them if possible to avoid misplacing your savings in various countries.
When Will You Retire?
If you’re young, chances are you’re not entirely sure what you want to do in the long run, and thinking about retirement can be a nuisance. However, as an expat, you have to be smart about it as you probably won’t enjoy the luxury of your employer looking after you in your golden years.
Aside from considering where you want to retire, you also need to think about when you will retire. Early retirement is attractive, but if you don’t start working on that goal early on, you will probably have to continue working well into your twilight years.
So if you don’t want to worry about not having a comfortable retirement, you need to start planning as early as possible. If you don’t qualify for a state pension, think carefully about how you’re going to fund your retirement.
If you’re planning to stay abroad, try to get citizenship as soon as possible. On the other hand, if you decide to move back to your home country, start considering the best ways to transfer your savings in the most tax-efficient ways.
Who Is Funding Your Retirement?
Maybe you’re eligible for a public pension. Many governments provide tax breaks to make it easier for you to save for retirement. You need to research different schemes and see if they suit you.
Chances are that as an expat, you tend to move a lot and work short-term contract jobs, which makes it difficult to track your pension pots. You might have contributed to several systems throughout your life. The important thing is to keep track of them and know your pension rights.
The biggest problem with short-contract retirement contributions is that you may lose them when you switch companies or countries. That’s why it’s essential that you find out what happens to your funds in these scenarios.
If you can’t count on a workplace pension, a good idea is to consider a personal pension plan as a way of saving for retirement. Numerous countries even offer tax relief for pension savings.
International/Offshore Pension Plans
Expats can also make use of international pension plans. These are usually devised by international banks or insurance companies, and they allow you to consolidate your pension pots and have them all in one place.
This type of plan allows you to contribute to your savings from any country as well as access your funds from anywhere. In essence, you get a portable pension, which you can “carry with you” wherever you go.
Investing in Property as a Retirement Plan
Many expats decide to contribute to their retirement savings by purchasing property and renting it out. That way, they get passive income on a regular basis in their golden years.
Some countries are better than others when looking to buy property as an expat, but this can be a risky move. You need to take various factors into consideration before you decide to go through with it.
For instance, you need to check if you’re eligible to get a mortgage in your country of choice. If you are, do you receive the same treatment as native citizens? In other cases, you might need to seek a mortgage in your country of birth.
How Much Is Enough for a Comfortable Retirement?
The final thing you should consider is your desired monthly income in retirement. A comfortable retirement is a relative term, and what it means to you depends entirely on what lifestyle you intend to lead in the third age.
As we’ve already mentioned, it would be wise to consult a financial adviser. They will help you figure out how much you need to save in order to achieve your goal in due time.