There is absolutely no rule written in any book or guide that states you have to wait until you’re too old to enjoy it to retire! You can take retirement at any age and any stage – as long as you can afford to – and there’s the critical point, you have to be able to afford to live when you retire, and so the earlier you do retire, the more money you are going to need to save before you can retire!
If you’re really fed up of working, you long to indulge your hobbies and pastimes far more, you want more time to yourself and you don’t want to be beholden to your boss forever, we have 10 ways to save for early retirement. We cannot guarantee when you will have enough money in your bank account to hand in your resignation letter, but we can ‘guarantee’ to inspire you to save and invest more today so that you have a far better chance of retiring when you want to.
Expatriates have a whole range of advantages over their onshore peers when it comes to their saving and investment options, and so in this report we’re going to focus on these so that you can be inspired to maximise the benefits available to you – and get ahead in the great retirement savings race.
1) Have a Plan – and Stick to It!
Think about the lifestyle you lead now and the kind of lifestyle you would like to lead when you retire – compare costs and think about any additional costs you may have to incur as you age. For example, you may be paying a mortgage now and plan to have paid that off when you retire which will reduce the amount you need to live on a month…however, as you age you may need to increase the amount you pay for medical insurance if you’re living abroad.
You need to have a goal, a target in order to have something to aim towards in terms of your savings – so assess how much you think you will need to live on each year, and work with a wealth adviser to determine how much you will need to accrue in savings and investments to achieve your goal. Then, you will have a plan to work with to enable you to retire early.
2) QROPS
As an expatriate or someone who is perhaps considering retiring abroad, you need to explore your eligibility for QROPS (qualifying recognised overseas pension schemes) and whether these HMRC backed, hugely potentially tax advantageous schemes could suit you. These are a form of ‘offshore pension’ and they are ideally suited to those living outside of the UK, or those planning to retire abroad.
They can allow for a massive diversification in terms of savings and investment options, they can remove your requirement to buy an annuity with your pension, depending on where you live when you take early retirement and access your QROPS you can also potentially access your savings tax free!
So, QROPS have to be explored by anyone wanting to retire early – because they could be a real enabler.
3) QNUPS
Qualifying non-UK pension schemes are a newer alternative to QROPS, which should also be explored, particularly if you’re currently an onshore higher rate tax payer who intends to retire overseas. The legislation governing these schemes is not as mature as that covering QROPS so up to date and qualified advice should be sought from a wealth adviser – but they can allow for tax-enhanced savings options towards retirement.
4) Tax-Free Savings
Talking of tax-enhancing your savings and investments – expats have the right to explore their tax-free savings options. There are schemes and policies in the offshore world that can allow for tax deferred saving and even tax free saving – and naturally, the less tax you have to pay, the more leverage your money gets in terms of growth potential.
5) Accessing Preferential Rates
Certain wealth management companies and brokerages put so much business through the major financial institutions that they are offered preferential rates and cut price fees to pass on to clients. Research who you trust to give you advice, and find out if you could benefit from better rates on your savings…after all, the more interest you can earn and the less fees you have to pay, the faster your money will grow.
6) Make the Most of Your Time
Do you have spare time that could be better ‘employed’ and allocated to paid work? Whilst we all need downtime to balance out the number of hours we commit to our careers, perhaps you have a few hours a week you could offer to a local employer, and perhaps you have skills that are in demand in your local area? In other words, could you take on a second job to eke out a greater income that you can then commit towards your retirement savings pot?
Also – when you do take early retirement, you might find you have a lot of time on your hands, and whilst you’re more than happy that you’ve left your old job behind, you may be inclined to take on a less pressured and stressful part-time job to supplement your retirement income? This could be a solution that will allow you to retire even sooner.
7) Get Out of Debt Faster
The more debt you have, the more you will pay in interest and charges, and the less you will have to save towards your retirement. So, the sooner you pay off your credit cards, car loan and mortgage the more money you will have in your pocket to contribute to your savings fund. Pay off lump sums, commit to working your debt down to nothing and you will be absolutely stunned at how quickly you can ramp up your savings fund when you’re not paying hundreds or even thousands each month in interest payments.
8) Re-evaluate Your Priorities
Many of us fall into the consumerist trap of having to have a large house, all mod-cons, a new car on the drive and new clothes on our back each season. However, if you take the time to re-evaluate your priorities, you will see how instead of trading your property up for a bigger, ‘better’ home – instead of getting into more debt to have a newer car on the road etc., you can have more money ‘spare’ each month to save.
The world would stop turning if we all stopped spending – but most people are suckered into believing they are somehow underachieving, or that they will be unhappy if they stop spending. It’s not true! Try it and you will see that actually, your life can change for the better when you don’t buy into the belief that you have to keep spending to keep happy!
9) Make the Most of Your Assets!
Think about the assets that you do have – your home for example. Is it a large house, one that could accommodate a lodger to bring you in extra income? Do you have spare drive or garage space you could rent out? What about the skills you have, could you be offering them up to more people or for more money? Do you have antiques you don’t appreciate, jewellery you don’t wear? Look at what you do have, and look at ways to make the most of it!
10) Constantly Reassess
The very first point we made in this report is that you have to have some form of goal in order to target your saving activity towards it. In other words, you need some sort of idea of how much you need to live on when you retire early so that you can have a plan to save that amount of money. However, things change! From interest and annuity rates to your priorities and even currency exchange rates. You need to work with a wealth adviser to regularly reassess your savings and investment goals and the strategies you have in place to meet them.
Keep ahead of the game and then you can retire early!
