When thinking about retirement, one of the things most of us duly accept is that we will have a fairly fixed income to live on…perhaps affected by the fluctuating fortunes of the stock market or the whimsical nature of interest rates, but none the less, an income limited by the fact we’re not working each month to bring in more money.
On one level this is absolutely fine – because it means we will be retired, no longer required to get up at some God-awful hour, commute to work or pretend we care about socialising with work colleagues outside of work (!). On another level, it’s quite a scary reality – particularly if you’re a bit of a control freak like me!
I don’t relish the thought of having to stretch my resources, limit my expenditure or watch my outgoings. So, I have decided that being a perpetual expatriate will be no bad thing for me when I come to retire…because potentially, depending on where in the world you retire to and how you arrange your financial affairs, you can get far more for your money abroad. In this article I’m going to show you how to make your pension go far further abroad too…
Unless you’re a magician you cannot turn ten pounds into twenty pounds – so you have to think laterally when it comes to how you can make your pension income go further abroad. Hopefully the following 5 tips will give you some ideas, some food for thought and some very real and practical ways that you can make your money worth more to you if you move to live abroad in retirement.
Tip 1 – Research Your Retirement Location With Value in Mind
Not every country is a rip off nation where you’re stealth taxed on every activity you undertake, where the cost of fuel and food goes up on the whim of the government or big business, and where you have to pay, pay, pay. Thankfully there are nations and people, societies and communities that are far more comfortable with what they’ve got, and where you’re also welcome to live. Take some of the Eastern European and Central American countries as very good examples.
Countries such as Bulgaria, Croatia, Belize and Panama all offer a very decent standard of living to their citizens, for far less money than nations such as the UK, the US, Canada, France and Germany. Sure, the balance of wealth is not so evenly distributed in such countries and there are those who live beneath the breadline – but the average wage means that the average cost of living has to be well within reach. And for ‘wealthy’ Western retirees, this cost of living is positively cheap.
Yes, the pound is currently in the doldrums against the purchasing power of the euro and the dollar – and this limits and impacts on Britons moving abroad in retirement. But there are still plenty of countries where even your currency will afford you a good standard of living. You don’t have to head for The Philippines, Thailand or even Pakistan and India to make your money go further, you can remain closer to the beaten track and just live away from the tourists and their overpriced bars and supermarkets, and live like locals in your new nation.
Do your cost of living research – find out where the money you have will actually buy you more in real terms. Then factor in favourable currency conversion rates through FX brokers and the fact that one day the pound will bounce back, and down the line, your affordable life could become even more affordable!
Tip 2 – Research Your Retirement Location With Tax in Mind
There are countries in the world where retirees can actually live 100% tax-free! Nations such as Belize, Malaysia and the aforementioned Philippines all offer retired person incentive schemes that you buy into, and then can live 100% free of tax on all income assets and gains that accrue and occur outside of the country you’re living in.
Alternatives also open to you include you moving to lower tax countries such as Cyprus where tax on pension income can be as low as 5%. Look around, do your research, find out where you can go and live a good quality of life for less money and paying less tax…you will find that your research will quite literally pay you dividends.
Tip 3 – Consider Your Offshore Options
You may find that you can stash your wealth offshore, legitimately saving yourself taxation and/or accessing higher potentially returning savings and investment schemes. These offshore options that are usually only open to expatriates can have the multi layered benefit of saving you tax, allowing your income to grow far more intensively and giving you greater freedom of investment and money management – a win-win situation all round.
Anyone thinking about moving abroad in retirement would be unwise to forget about their offshore options – by embracing totally legitimate investment paths offshore you could actually save yourself tax potentially, and certainly put your money in a position where it could work far harder for you.
Tip 4 – Retirement Can be a Whole New Start
Just because you’re retiring from your main form of employment, this doesn’t have to mean you have time on your hands and going to waste 24 hours a day! You could view your retirement as a chance to pursue other goals and ambitions that you have. These could be goals and ambitions that you use to make money! Perhaps you fancy being a travel writer, and now you’re going to be living overseas, what better time and opportunity than ‘now’ for you to get into that. Maybe you would like to teach, again, it’s a money making opportunity.
Perhaps you’d just be happy helping out at a local shop or on a local farm? Anything you can do to bring in a few extra pounds/dollars/euros whatever, the better in terms of the income you have to live on in retirement. I’m not suggesting you go back to the 5-day working week, pushing yourself to notch up 40 hours at a desk pushing paper when you need to be chilling out and enjoying life. I am saying however, that you may find you have a lot of time spare, and that you can put that time to good use – financially speaking!
Tip 5 – Diversify With That Which You Have
Finally, as you’re going to be living abroad, you are going to be in a positive position to perhaps offer bed and breakfast, or tours and excursions to tourists from your old home nation who land up in your new nation, and who want to be guided around. You can turn your home into a hostel, or just let out a room maybe? And/or you can hire yourself out as a private guide to people as and when the whim takes you.
Look at how your new position as an expatriate abroad opens up a new world of opportunity to you. Don’t be limited by your old ways and habits that you bring from your old life – you’re living the dream that many people would love to share. Exploit your position for the best – maybe even writing about how to make it abroad in your particular country as a retiree on a fixed budget?
I hope the above 5 tips give you some food for thought and some good ideas that you can work on and work into your plan for a relocation overseas in retirement – and that they can help you make your retirement pension income go far further abroad.
