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An Expat’s Guide to Financial Planning for Retirement

Retirement can be exciting or dreadful depending on how much you’ve accomplished for yourself by the time you hit your prime. In reality, retirement should always be one of your priorities and must be planned ahead of time. Many people wish to retire on their own terms and pace. Some choose to retire in their home country with their family, others prefer to stay where they are (i.e. Singapore), usually for the lifestyle they’ve embraced and convenient living conditions.

There are plenty of good questions to ask but the most important question here is really not where or when you will retire, but what is your goal for your retirement? If that made complete sense to you, understand that the only way to achieve your goal is through financial planning.

Things You Need to Consider when Planning Your Finances for your Retirement

Living as an expat abroad poses many different challenges. There’s always the uncertainty with work. Also, there’s a high possibility of moving to different places within a short period of time. In addition, some foreign employers do not offer the standard pension schemes which are typically available in your home country – plus expats may not be eligible to apply for local retirement savings. You’d also need to look at how you’ll save up for your own retirement if you can’t set aside some funds to continue your pension back home.

If all those things seem too much to take in all at once, then have comfort in the thought that you have options and time to plan for your retirement. The earlier you start planning, the more flexible and adaptable you become in handling your finances. Moreover, if you start investing early for your retirement, you are giving yourself more allowance to recover and comeback in between temporary setbacks and losses over time.

When you create a goal in mind, it has to be objective, specific, realistic, and time-bound.

Much of the planning involves a good balance of practicality and convenience. With that in mind, let us look into key factors that you need to consider when saving up for or investing for your retirement:

  1. When do you want to retire?

First of all, this is not a rhetorical question. Your financial goals will be plotted within the timeline you give yourself until you reach your set age for retirement.

  1. Where do you want to reside when you retire?

Many retirees plan to spend their advanced years back home with family, but if you’re considering living in your adoptive country or somewhere else, it’s very important to look into the cost of living in your location of choice.

  1. What are the extra costs to consider?

Factor in the cost of healthcare in your advanced years even if you still feel strong and well, as this will surely be important (to you and your family) and rather costly if left unchecked. As you’d expect, your children would be living away… somewhere. Great! But what if they’re living in different countries? Travelling to visit them would cost you a fortune. So, it’s best to plan ahead for these things while you still have the means to save up.

Life doesn’t end with retirement as others would like to believe. Nowadays, many people are looking for more flexibility to do things such as travelling and going for new experiences and adventures they missed out when they were younger because of busy schedules or having the kids around.

Creating your Retirement Fund

After you’ve set a financial goal that would cover your retirement expenses, the next thing to do is to utilize various sources of income to produce the amount that you need within the timeline that you’ve set for yourself until retirement. Aside from your regular pension, you can look into the following sources of income to create your accumulated retirement fund:

  • Cash in the bank
  • Social security or government service pension
  • A share portfolio
  • A buy-to-let property portfolio
  • A small business
  • Consultancy jobs or part-time work during retirement

Note: To maximize the growth of your savings and earnings, consider other factors that could affect your finances such as tax. Every country has a different tax rate and some may tax your worldwide income. Moreover, certain assets such as property and share portfolios have higher tax rates. If you wish to attain the elusive “tax nomad” status, then you need to make several three-month trips to at least three countries among other things.

Final Note/Things to Do:

  1. Set a specific financial goal for your retirement.
  2. Work within your timeline and be wary of investment risks; property assets take more time to produce dividends than a share portfolio.
  3. Choose your preferred modes of investment.
  4. Consider the value of currency and tax rates in the country you wish to reside in for your retirement.
  5. Produce assets based on your profile, your risks and fund timeline.
  6. Stick to your timeline and make adjustments as necessary.

 

As the famous saying goes, “failing to plan is planning to fail.” You may wish to retire at a much, much later time but without ample planning for your retirement as early as now, everything you’ve worked hard for will be for nought.

 



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