A GUIDE FOR EXPATS AND DIGITAL NOMADS TO CREATE PERSONAL CROSS-BORDER RETIREMENT PLAN

As an expat or digital nomad we often can't count on a state pensions.

Moreover life is changeable and our retirement plans should be flexible to satisfy with personal needs.

We want to control our future and decide ourselves when to retire and what income to have.

For most of us, retirement still seems quite a long way off. But carefully considered, it probably requires action now, if we really want to enjoy it.

We are more likely to enjoy a longer retirement that our parents and grandparents did. Over the last 60 years, statistics show that life expectancy has improved dramatically as a result of advances in medicine and significant social and economic changes. And more people than ever before are retiring at an early age. Our view of retirement has also changed enormously. Naturally you will want to maintain your current standard of living. But nowadays, you may also see it as a time when you can travel, take up new hobbies and generally enjoy more free time and independence.

Are you saving enough for retirement?

One of the biggest risks to you achieving your retirement goals is that you may simply not have saved enough money. If you don't save enough today, you may be faced with the harsh reality later in life of having to cut your expenses and standard of living dramatically. That's why it is so important to start saving as early as possible and develop a disciplined approach.

GET READY FOR RETIREMENT: PUT A PLAN INTO ACTION

When setting up your personal pension plan, there is no one-size-fits-all. When planning your retirement goals, you should look at various factors that may affect your final retirement pot. Some of the factors to consider when saving for your retirement:

1. Get An Early StartThe most important thing is to get an early start. By starting early your investments have more time to grow and could provide you with a bigger retirement pot. If you want a USD I million pot for your retirement, you need to save USD1,250 per month for 30 years, assuming a return of 5%. If you delay your retirement plan by 10 years, you need to save USD2,500 per month.
2. How Much Do You Need To SaveHow much you need to save depends on when you start saving, when you want to retire and the income you need to continue with your lifestyle. Your financial adviser will be able to assist with the calculation and how much you need to be saving regularly or use our calculator to get estimates - https://expatfinance.pro/retirement-planning/
3. You Are Likely To Live LongerToday's retirement land- scape has changed drasti- cally. With the advances in the medical field, people are now living longer, which means having more retirement years to fund. To maintain the same kind of lifestyle you are accustomed to, you have to start saving early or come to the realization that you might be working well into your sixties and seventies.
4. InflationWhat you earn today is unlikely to be enough to buy the same basket of goods in the future. Money in the bank will lose its value over time due to inflation. You should ensure that your money is invested in a proper regular saving plan so that it grows at a rate that beats inflation.
5. Other ExpensesYou need to consider the expenses that will continue in your retirement age. Factor in potential health- care costs and include worst case scenarios when planning your retirement fund.

EASY STEPS

• Plan your future life and income you need after retirement or for financial independence
• Calculate the capital you need to build to get the planned income, create investment strategy
• Start contributions and investing

TIPS FOR SUCCESS

• Start contributions as early as possible
• Invest - don’t keep in bank
• Use tax benefits that available for expats
• Plan to use only return from investments but not the capital itself
• Plan succession and nominate beneficiaries
• Get an expert advise - delegate

THE SOLUTION: PRIVATE CROSS-BORDER RETIREMENT PLANS

Reasons why

Depending on your country of residence and the taxation and succession rules that apply, as well as the product options available to you, the cross-border retirement plans can be used to provide you with:

1. Life insurance to protect your family in case of breadwinner death or disability
2. Receiving regular withdrawals for your living expenses, possibly supplementing your retirement income
3. Providing an amount to pass on to your beneficiaries when you die as the capital is fully yours
4. Accessing the investment. Skilled professional asset manages with a wide choice of options that may provide better medium to long term returns than cash deposits through exposure to equities and alternative investments.
5. An efficient tax planning. Often referred to as the "gross roll-up" effect, investments in cross-border retirement plans grow free of year-on-year income tax and capital gains tax charges. Fund switches or selling the assets with profit do not trigger a personal liability to capital gains tax and, therefore, provide tax-efficient structure for active investment management. Tax deferment is also a key feature and you will have control of how much and when income tax is paid. This enables you to choose when a tax charge may occur, for example when you cash in some of, or, the entire bond. Cross-border retirement plans are non-income producing assets, there is nothing for you to report to tax authorities of the country you reside in until a chargeable event occurs.
6. An efficient succession and inheritance planning. Part of your wider inheritance tax planning when combined with the use of trusts or, for example, if you live in a country such as France or Spain where Civil Law Codes apply, the nomination of beneficiaries of your policy.

TAKE PROPER ADVICE

When purchasing a cross-border retirement plans, you should always take advice from a professional adviser.

Look for advisers with proved regulations and licenses. You can expect these intermediaries to conduct a detailed review of your current and longer term financial needs and priorities and to then recommend a product that is appropriate to your circumstances.

Things to consider and discuss with your adviser

To ensure that a cross-border retirement plan is suitable for your needs, you may wish to consider the following points:

• Long-term care funding. As time goes by, you may need a form of long-term care. Make sure that the Plan' rules allow you to set up a regular withdrawal facility to cover your needs, if required
• Access to your money. Ensure that the assets selected to invest in are not 'locked in' i.e. there is no extended waiting period before they become accessible. Most assets have daily or weekly dealing, while some deal on a monthly basis. Alonger waiting period quite often applies to to some property funds and hedge funds, for example.
• Spreading the risk. Whether your Plan invests solely into an issuer's internal unit-linked funds, or enables you to request links to a wide range of collective investments, remember that you bear the investment risk - not the issuer. Make sure that there is a diverse selection of assets invested in your Plan, so that your risk is mitigated if any asset performs poorly or becomes illiquid. This should also help to ensure that you can continue to get access to your money as and when you need it. Remember that it's not just about how many assets your Plan is linked to, it's also about getting access. Let your adviser know the extent to which you are prepared to link your Plan to assets that may be high risk, or of a specialist nature. fI you give your adviser authority to buy and sell assets on your behalf to invest in your Plan he will need to understand your appetite for risk.
• Charges. It is important that you understand all the charges that apply to your Plan, as, to make any gain on the investment linked to it, the investment performance first has to be sufficient to cover those charges. There will normally be more charges in the first few years than later, as most costs occur in the early years. Ask your adviser to explain all the charges that apply to your Plan, including any charges that will be made to cover the management costs of the linked assets. Depending on the country in which you are resident it may be possible to obtain an illustration that shows the likely performance of your Plan and the asset selection that your adviser is proposing. You may also ask for illustrations of other companies' products for comparison purposes. By comparing different companies' products you will see the effect of the product charging structure on your projected returns. This may not show you the effect fi the charges applied by the linked assets, but these should be available to you on the fund fact sheets provided by the asset managers. Ask your financial adviser for them.
• Cost of withdrawal. Retirement Plans are intended as a long term solution. However, always ask your financial adviser about the costs of withdrawing some or all of your money. These costs may apply both in respect of your Plan and the underlying assets. That may differ in the early years (because early surrender penalties may apply to the policy) and often become much lower, or disappear altogether, during the life of the Plan. The detail of these charges, as they apply to the Retirement Plans, will be set out on the policy's Terms&Conditions and your financial adviser should provide you with these. You should take some time to read them, checking with your financial adviser any areas you don't understand or feel comfortable with. You should also ask your adviser about any withdrawal charges that apply in respect of the underlying assets which he recommends you.
• Changing your mind. Remember that if you change your mind about investing in your Plan most of the time you can "cool-off" during the first 30 days and instruct the issuer company to cancel your policy. In some countries in Europe you will get all of your money back, whilst in others countries, if the Plan has already been invested in your selected assets, you will get back the value of your policy taking into account the performance of those assets, which my be less than you paid in.
• Protection & Compensation schemes. In the unlikely event of the insolvency of your issuer, most jurisdictions have schemes in force to ensure the continuation of your policy or to trigger compensation arrangements. Ask your adviser how your savings would be protected. Are there confirmed segregation of assets.
• Take your time. Above all, take your time to make your choice. Personal Retirement Plans are designed to be held for the medium to long term, so make sure this is the right choice for your needs and do not be rushed into making a decision

If you have any question or you’d like to get help to build a personal retirement plan - don’t hesitate to book a free 30-min consultation with me here - https://calendly.com/korolevdb/30min

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