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You may have moved overseas because of a challenging job offer, for the romance and excitement of seeing new places, for first hand experience of different cultures, for a change of climate or for any of dozens of reasons.
But almost always, financial considerations such as higher salary and lower tax are a factor in the decision.
The result of being overseas is probably that you have more 'disposable income' than in the past. Disposable Income is money not committed to paying for life's essentials. Especially when living overseas, disposable income is very easily disposed of!
Here is an opportunity to have an interesting few years and build a 'nest egg' as well. Yet, all too often, the 'nest egg' is not there at the time of return to the home country.
Indeed many return home in a less advantageous financial position than their 'stay at home' friends because they have allowed a 'pension gap' to build up.
Leaving your home country almost certainly means you are no longer a member of an occupational pension scheme. Probably you are not contributing to your home country's retirement scheme (although probably, as with UK, if it is allowed you should do so).
A Great Big Hole in your Retirement Provision
If you allow, say, 5 years to go by with no retirement provision you have made a great big hole in the amount of your possible income when you retire.
How much? A reasonable 'rule of thumb' is that a 5 years 'gap' in contributions is likely to reduce income in retirement at age 60/65 by about 40%.
For single lady expatriates this is probably the single most important financial aspect of being overseas.
You seldom have need of life assurance and you do not need to plan for children's' education. But, neglect of basic retirement planning, so easy when retirement seems a long time away, will bring heartache some day.
Try this simple bit of arithmetic. Calculate how many monthly pay-days are left till you retire. For instance, if you are 34 and plan to retire at 60 you have 312 pay-days to go.
Around age 60/65 your salary stops but you still like to eat so will still need income. If you have not set aside a little of your salary on each of those 312 pays days where will that income come from?
A year from now you have only 300 pay-days to go. Every passing year means more has to be found each pay-day to reach a reasonable target. The target varies from person to person but as a rule-of-thumb, you need to retire with funds equal, at an absolute minimum, to about 15 times final salary.
Good fairies are in short supply! We all have to make and finance our own arrangements
Time is Just as Important as Amount of Regular Savings
Plenty of time till retirement you may think. "I'll start a plan in 5 years or so". But by then you have 60 fewer pay-days left from which to build up the same retirement fund (to see an example of the results of "put it off" please click HERE).
Whatever age you are now, for every #100 per month you might have set aside but did not you will need, 5 years later, to save about #200 per month; 5 years after that you will need to save about #400 per month and so on.
"Enjoy the present and secure the future" is a good guideline at any time but especially during expatriate years. With a little common sense planning, the two are not incompatible.
How you enjoy the present is entirely your choice. We can help with securing your future. Start now and be surprised at how easy it is.
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CAUTION
Do not be tempted to sign a long-term contract for any life assurance company's 'International Retirement' or 'Offshore Savings' plan.
You should not agree to any term longer than Five Years
It might seem reasonable to arrasnge such a plan for the number of years up to your targetted year of retirement. But that might be 10, 15, 20, 25 or even more years away.
A contract for that kind of number of years carries heavy charges and severe penalties that are dfifficult to decipher. It is never wise for any expatriate to make such along-term plan.
Make it a five years plan. Then, if all is well 'Rinse and Repeat' for as many years as suit you. |
Signing a retirement savings contract that commits you to contribute for 15, 20 or 25 years will usually turn out to be a financial disappointment, possibly a disaster.
Much preferable is a dhort contract term of 5 years or ‘non-contractual’ offshore savings plan. With these you do not have to commit yourself to a long-term thatmay be costly to alter should circumstances change.
For more information on any of the above matters please use our 'Send us Your Query' form. |
