A comfortable retirement means having the financial independence to choose how to spend your life without having to worry about whether you have enough to cover your living expenses. To achieve that, you need to have accumulated enough wealth to replace the income you currently get from your employer and/or your business. Adon Beddoes, our Chartered Financial Planner based in Ho Chi Minh City, shares his tips for expatriates looking to secure their financial future in retirement.
Five tips for retirement planning success
1. Start early
Gone are the days when we could rely on workplace and state pensions to see us through retirement. Increasingly, individuals are having to take responsibility for their own future financial wellbeing.
Disciplined saving is key to accumulating enough assets to give yourself the income that you will need when you stop working. Start saving as early as you can.
The importance of starting early cannot be overstated. The sooner you start, the lower your annual savings rate needs to be. If you don’t take retirement planning seriously until your forties or fifties, achieving your target retirement income becomes so much more difficult as you will have lost years of potential compound interest.
2. Ask these important questions
A comfortable retirement starts with defining a financial plan. That means quantifying your retirement goals. The most important questions to consider are:
- When do you want to retire?
- How much time do you have to save for retirement?
- How much income will you need to live in retirement?
- Will you be financially supporting anyone else?
- What are your potential future medical requirements?
- What other future expenses might you need to consider?
- Where will you live in retirement?
- Is your pension income likely to be taxed?
It’s not always easy to find the answers to these questions. I recommend seeking the advice of an experienced professional who can flag up potential issues you need to factor into your plan.
3. Decide how much risk you can take
Balancing risk and reward is not easy. You need to be able to live comfortably now while generating sufficient returns to meet your future financial needs.
Again, the specialist knowledge of a financial adviser is invaluable here. They will bring sophisticated tools to the party which can accurately assess your risk tolerance and your cashflow requirements during retirement.
For expatriates, it is important to find someone who is familiar with the additional issues that living abroad adds to the planning process.
Once all this information is gathered, a financial planner can put together a holistic investment and savings plan that aligns with your current financial commitments, your age and your goals to ensure that your money is working as hard as it can to meet your future needs.
4. Select investment products that deliver
Underachieving portfolios can seriously harm your retirement plans. The key to success is in carefully selecting assets that will produce long-term and consistent results to build your wealth through capital growth.
You may think that a couple of percentage points difference in return doesn’t matter a great deal but over several years, that difference can have a huge impact on the value of your portfolio, and therefore on your income, when you come to retire.
It is vital to choose an investment manager with a proven track record and that offers a wide choice of funds so that you can select the one which best fits your individual circumstances taking into account your own personal tolerance to risk.
5. Don’t neglect estate planning
This is a crucial part of your retirement plan. Taking the time to get this right will safeguard the future wellbeing of your loved ones and dependents and save them a lot of stress after you are gone.
Again, expatriates face additional estate planning challenges. I would always advise working with specialists that work specifically with expatriates.
I have years of experience helping expats in Vietnam to establish their long-term goals and secure their future financial security in retirement. In addition, Infinity has an exclusive partnership in Asia with Evelyn Partners, one of the world’s best investment managers. Evelyn offer a wide range of investment products to choose from so you can balance risk and reward to get the best possible return.
Chartered Financial Planner
It is my fundamental belief that financial planning makes life better. I enjoy helping my clients work towards their financial goals to give them freedom and choice.