What All Expatriates Living and Working Abroad Should be Doing

Are you an expat, living and working abroad, having the time of your life and living the dream?  Have you any idea what the one thing is that you should be doing, the one thing above all other things?

You might think that it is phoning home more often, or perhaps you think it’s blogging or twittering about your experience to make others jealous or to inspire them to join you, maybe you think you should be having more fun, working hard but playing even harder?

Well, whilst all those might indeed be very valid points to consider when you’re overseas, what all expatriates living and working abroad should really be doing is…saving for their retirement!  You may prefer to switch off at this point, click on an advert or read another article, but if you instead give me 2 minutes of your time, I will show you how and why absolutely every single group of expatriate in the world, (with perhaps one exception), has absolutely no excuse not to be saving for their retirement…and how, if you choose to ignore this information, you could be writing out the path for your very own poverty stricken future!

According to some of the leading online financial sources, one needs to save in the region of half a million pounds to have a happy and healthy retirement fund to play with.  Most ‘ordinary’ people read this and switch off to the fact that they need to save for a pension – after all, half a million pounds sounds like an incredible and unobtainable amount.  Personally, I couldn’t agree more.  However, it’s like the old saying “how would you eat an elephant?”  The answer is “a bit at a time” – i.e., how do you save for your retirement?  A bit at a time!  Which is why everyone bangs on and on about how important it is to start saving as soon as possible.

So, if you’re in your twenties or your thirties, you’re living and working abroad, you are generally best advised by anyone who is qualified to give advice, to start saving for a pension – pronto!  This is because the longer you have to save, the more time your money has to compound up, accrue interest, fatten out with dividends, get the best out of the fluctuating fortunes of the stock market and so on and so forth.  It is all of these (hopefully) positive financial actions that occur as a direct result of you saving into a pension pot, that help your fund fill out to become the half million pound pension package that you ideally want.  Or as close to that amount as is possible and realistic based on what you earn and can afford to save.

Now, here comes the next argument, in our twenties and thirties we all have better things to spend our money on – and I’m not just talking about going to parties and jetting around the world.  I’m talking about the fact that we have student loans to pay off, we have deposits to save for for a home of our own, we have to pay to set up our expat life abroad, we potentially get married and have children, and it can be very hard to afford to save.  And yet, save we must if we are to be anything other than penniless and destitute in retirement!

So, no matter how much you have coming in compared with how much you have going out, you need to find a way to have money that you can save into a pension pot.  According to Tom McPhail, who is a pension specialist at Hargreaves Lansdown: “To suggest anybody under the age of 40 shouldn’t bother investing in a pension is a counsel of despair.”  So says he in a recent article on LoveMoney.com…

And now then, as an expatriate you have even fewer excuses than your peers back home when it comes to saying things like: “I don’t have enough money to save any money.”  Yes, you may well incur more expenses when you move abroad, however, you may well be in an advantageous position when it comes to both taxation and salary/remuneration benefits that will allow you to potentially have more excess income that you can dedicate to retirement savings.  What’s more, you don’t even have to make use of a boring personal pension or even an ISA if you want additional flexibility and choice when it comes to how you save and invest for your future.

If you’re living abroad and no longer have to pay tax in the UK, if you also find yourself in a position where your taxation in your new nation can legitimately be optimised and reduced to a minimum, then you have an advantage.  If you are being favourably looked after by your new employer in terms of your package, you have an advantage – and what all of these advantages translate to as well is choice. 

You have more choice in terms of how you save and where you save.  You can save onshore and offshore, you can save into traditional retirement vehicles or you can choose the likes of QROPS, or even utilise a personal portfolio bond.  You can save lump sums, tiny monthly amounts, you can top up, take a break and be as flexible as you want.  So really, you have no excuses.  If you’re an expatriate living and working abroad – you need to start saving towards your retirement because you can, because you should and because you have far more choice and a bigger savings advantage than your peers back home.  Just one more thing you can blog and twitter about to make your peers jealous!