3 Pillars of Expat Retirement Planning
15th of September is Pension Awareness Day, and so in an attempt to increase that awareness, we turn the spotlight on a subject that we all require at some point in our lives. Soteria Trusts discusses expat retirement planning, and more specifically, looks at the 3 pillars that are considered fundamental to the implementation of an effective retirement strategy. Pensions were introduced so that each member can save throughout their working careers and when they reach retirement they can enjoy a better than average lifestyle, and not have to worry about where next month’s money will come from. Below, you will find an overview of the 3 pillars and the rationale behind each one of the stages.
Pillar No 1: Know your retirement needs
The first step of any plan is to work out the end goal. When it comes to retirement planning, that means establishing how much money you will need in each year of your retirement. There are some complex formulas that can be used to determine what the amount is, or you can use a very simple formula that will provide you with the size of your target retirement fund. That fund will then be used to provide you with the desired income each year.
At Soteria, we like to keep things simple and easy to understand so rather than put it off any longer, visit our easy to use Retirement Calculator and see if you are on track to a comfortable retirement. If you are, that’s fantastic, and you should keep doing what you’re doing, but what if the result tells you that it’s time to recalibrate any existing plan you have?
You may be looking seriously at retirement planning for the first time, or it’s possible you may have looked at it previously and not got round to getting started yet. If that’s you, then don’t do what you’ve done previously because the longer you leave it, the more it will cost you to achieve, and the more expensive it becomes, the more likely you are to put it off again and again until one day you wake up, and you’re there.
Retirement may seem like years away, but that doesn’t mean that you shouldn’t be making provisions throughout your career. If you really want the retirement you deserve, then you will need to make some commitment towards achieving it. Our calculator will tell you the size of the retirement fund you will need to maintain your chosen lifestyle.
How much you will need is a question that only you can answer. Most of our clients tell us they could live comfortably on 75% of the income they are receiving immediately before retirement. In contrast, others prefer to have the same or even more income in retirement. Once you’ve established what you require, you can implement a strategy that ensures you get to where you want to go and that your desired income will be waiting for you. The road to retirement is long, but that doesn’t mean you can put off starting the journey.
Pillar No 2: Build your retirement fund
In isolation, the amount you need to contribute to retirement savings each year to reach your target fund might look affordable. Still, when added onto existing commitments such as rent, mortgage payments, school fees, holidays, food, clothes, socialising and hobbies, to name a few, it’s easy to see why retirement planning is often overlooked and gets pushed down our list of priorities. Many can’t afford to or choose not to save for retirement, but how will they pay for some or all of those things just mentioned when they reach retirement and find themselves with little or no income?
Once you know the size of your target retirement fund, you should explore different savings or investment options to help you build it. All of the pension solutions offered by Soteria come with an in-built investment platform that allows you to be active by selecting and self-managing any asset class you desire. Alternatively, you can take a more pedestrian approach and choose from a range of Model Portfolios constructed and managed by some of the most respected names in the investment world.
Whether you want to be hands-on or hands-off, and whether your appetite for growth is risk-on or risk-off, it doesn’t matter as there is plenty of flexibility on offer and retirement options to suit everybody. On top of all that choice, our pension recommendations ensure tax-free growth on the investments and assets held in your pension. At Soteria, we want to help you achieve your retirement goals in a tax-efficient manner.
Pillar 3: Enjoy the income and pass on your wealth
This final pillar deals with both pre and post-retirement considerations. To many, expat retirement planning focuses on saving so that you can do all of the things you want to do in retirement, but what about tax planning as well? Nobody likes to pay tax, whether that is during their lifetime or after they have passed away. With correct structuring, Soteria will factor in your tax position today, what it will likely be during your retirement and also following your death. We want to ensure that you pay as little tax as is legitimately possible. With some careful and strategic planning, it’s possible to pay very low-income tax rates during retirement.
This involves taking advantage of all of the tax benefits available and staying on top of that during retirement. Of course, you can always do that yourself, but it’s more than likely you will need some specialist help. That help can come from specialists such as tax and financial advisers, but once you become a member of a Soteria pension, you have access to all of that specialist advice, so why pay others when you have all of that ongoing assistance in one place?
The Inheritance Tax Factor
At some point in our lives, we all contemplate death and having planned and executed a robust retirement plan for ourselves, we now start to think about our loved ones and passing on a legacy to them. There are several triggers to having these thoughts, our age and state of health play a big part as we gracefully accept we can’t go on forever, and the other big trigger is tax. Once people start to realise just how much of their assets will go to the Government of the country where they were born or where they now reside, it prompts some urgency as they want to protect and pass those assets on to those they wish to benefit from their life’s work, and not the taxman. Our retirement strategies don’t wait for you to reach that realisation; they’re working towards your goal from day one.
We want you to lead the happiest and fullest of retirements that are possible, which is why we are there to support and advise you throughout the savings part, as well as the retirement part and even beyond the grave when we work with the people who you want to receive your legacy, however small or large it may be.
About Soteria Expat Retirement Plans
Soteria Retirement Plans are not only tax-efficient during your lifetime but also long after you’ve gone. You have options that allow you to draw the retirement income tax free, and depending on your nationality, residence and asset base, our pensions can help to mitigate Capital Gains Tax (CGT) during your lifetime. It doesn’t end there because a Soteria pension will minimise any Inheritance Tax (IHT) liabilities your estate may have once you pass away. Having the right retirement plan in place will save 28% CGT on any gains made during your lifetime, and your loved ones will save as much as 40% on what you leave behind for them!
Happy Pensions Awareness Day – we hope the above information was helpful and makes you take some action.
RETIREMENT PLANNING FOR EXPATS
Soteria retirement plans are available to all nationalities and are located in several jurisdictions to help achieve tax efficiency.
For an initial consultation to see if our Retirement Plans are the right fit for you.
