Daily expenses and cost of living is a commonplace concern throughout our working lives, but many unsuspecting expat pensioners shrug this off once they reach retirement.
The truth of the matter is that the cost of living can actually escalate during retirement, especially if you are converting a pension in pounds to a local currency, and it’s not unusual for many former professionals to find that putting their feet up is a costly exercise. So, to help expats make their overseas retirement more affordable, here are some proven pointers.
Because two out of every five British professionals have no pension plan in place, retirement often proves uncomfortable and pipedreams of living abroad are usually dashed. State pensions pay approximately £300pw, which equates to an average £7000 shortfall in the cost of an overseas retirement.
So, a good starting point would be optimising your savings plans, ensuring you’re making the most of your money’s performance and getting a pension in place. The longer you wait, the less you’ll see in retirement fund returns, so be proactive and prioritise researching your options.
Getting the best value for money is also paramount, so choosing the right financial advisor as well as the right pension plan provider can save a pretty penny in fees alone.
Multi-currency accounts such as Qualifying Recognised Overseas Pension Schemes or QROPS are a popular, tax-friendly choice amongst the international expat community, but there’s an array of overseas pensions to choose from, so take the time to carefully consider all the options open to you.
Those nearing retirement might already have a neglected pension plan in their name. These are sometimes set up by previous employers, but just three in five Brits keep track, so do what you can to avoid this commonplace pitfall and keep a close eye on the most appropriate pension schemes.
Another important thing to remember is to never take anything for granted and never keep your eggs in one basket. Investment property is a perfectly illustrative example of how a formerly reliable form of investment is getting weaker every year.
Anyone planning on using the value of a forthcoming inheritance to pay for their retirement should carefully reconsider their options. Because inflation and fluctuating interest rates can ravage any retirement fund, minimise your disappointment now by injecting a little diversity into your assets.
Finally, don’t be afraid to accept freebies such as pension contributions from the government or employers, who will sometimes boost your annual pension payment by as much as a fifth with either obligatory or voluntary contributions; again, try to remember that these too are subject to change.
By Anthony Standring
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