How to ensure you stay on the right road to financial success once you relocate, move abroad, become an expatriate and go offshore!
Report filed under: Offshore Bank Account and Savings Reviews » Offshore Savings Accounts & Investment
Thu, July 02, 2009 - 1:10 pm EET
If you’re planning a new life abroad I’m sure you know where you’re going! You’ll have your destination all mapped out, you may even have a job you’re going to, perhaps you’ve even purchased the house you’ll be living in? All of this planning is essential for the move overseas to be a smooth one…but what about mapping out your path to financial success once you move abroad?
Are you thinking of leaving your savings ticking over as before, perhaps you haven’t given your pension a second thought? And what about your mortgage back in the UK, how will you still afford to pay that when you’re earning in a different currency? Then there are the questions about your life insurance and your health insurance. Have you taken all of these into consideration when planning your relocation overseas?
Few people take the time to get their financial affairs fully in order before they move abroad – because there is just so much more to get organised, and finances can often wait. As long as you have the money to make the move and you have an income to support you once you’re living overseas, that’s the main thing in terms of initial financial planning. However, there is so much more to successful expatriate wealth – and in this report we’ll map out the essential considerations for you. Follow our lead and you’ll discover your own path to financial success abroad.
Before you left the UK did you have a personal pension that you were saving into? Or were you perhaps in a work scheme? You’ll become non-tax resident in the UK and lose tax breaks on your personal pension maybe, and lose eligibility to your work pension if you leave that company behind perhaps. What’s more, you may not be eligible to join a works pension scheme abroad, and you may lose out on any state pension entitlement in the UK if you’re no longer paying National Insurance Contributions or their equivalent overseas. Because of these factors your long-term retirement income could be seriously harmed if you don’t take advice as soon as possible once you have expatriated.
We all know that the sooner we start paying into some sort of pension or retirement savings vehicle the better, but what are your options once you expatriate? The good news is that expatriates have far more choice than their onshore peers when it comes to finding a flexible savings vehicle. For a start Britons moving abroad who have an onshore pension pot worth over £50K can transfer that into a Qualifying Recognised Overseas Pension Scheme and immediately have huge amounts of pension flexibility, not possible with an onshore personal pension for example. In terms of the additional flexibility gained, this includes having more choice over where underlying funds are invested, taking the pension income from an earlier date, not having to buy an annuity, not having the British taxation authorities aware of your every fiscal move after 5 years, and of being able to leave additional funds to heirs in the event that you haven’t spent all of your pension when you die!
You also have access to alternative funds and savings solutions from bonds to funds, from straightforward savings accounts to taking a managed approach to your retirement savings path once you expatriate – therefore, even if you lose onshore benefits when you expatriate, you gain so many more benefits once you move abroad. Speak to an expatriate financial adviser as soon as you possibly can – because the sooner you get organised and start saving overseas for the long-term the better for your potential retirement wealth.
The next considerations you need to have relate to insurances. You have an immediate concern when it comes to getting the right level of healthcare cover in place because you and your family have to be protected and looked after as soon as you move abroad. We have covered the checklist you need to go through to find the right level of healthcare insurance in depth in a previous article, but suffice to say you have to look at what options are available to you in your new nation of choice, what entitlement if any you have to free or subsidised care, what you may potentially need, and insure up to that which you need.
You also need to think about reviewing your life and critical illness insurance when you move abroad. Your circumstances have changed significantly, perhaps you have greater exposure to debt now you’re living overseas, chances are you will not have the state to fall back on if you become critically ill, what’s more, how would your family cope and survive fiscally speaking if you or your spouse became unable to work? Get these insurances reviewed and in place to ensure peace of mind and security.
If you’ve eaten up all your savings to fund your relocation you have to prioritise and build up another emergency fund – it is often suggested that this is to the value of 3 months worth of your salary. With that in place in an easy access but interest attracting account, you can perhaps relax a little more into your new life abroad. You can then think about saving a regular amount each month and locking it in for a set duration from 3 months to even 3 years. The longer you’re willing to lock in for, the greater the potential returns often are. There are hundreds of schemes, funds and accounts suitable for such a saving approach, and your adviser will help you choose one that suits your needs and risk profile.
As an expatriate you are often in an enviable position compared to your peers back onshore. Perhaps you’re earning more than they are, paying less tax, perhaps you only pay tax on money remitted to your new nation, maybe you can save or defer tax by keeping money offshore. All of these are perfectly legitimate and potential possibilities for expatriates once they move abroad. You need to find out what advantages you have and which advantages you can make the most of. And to do so you need to start working with an expatriate financial adviser who a) understands your unique financial situation as a person non-resident in their old tax country and b)resident offshore and potentially in a situation to make the most of offshore saving, banking and investing.
To be put in touch with an adviser for a no obligation assessment of your situation, speak to us, if we can we will give you the contact details for a preferred Shelter Offshore partner in your location.
