Retirement Planning For Expats

Retirement Savings Options For Expats In Asia

Building a retirement nest egg is vital for all of us due to increasing life expectancy, shrinking basic state pension provision and the responsibility for having enough to live out our golden years in comfort now being placed squarely on our shoulders. In addition, expat retirement planning can help an expat save for the future while living out their lives abroad or in their home country.

The retirement savings options for expatriates are naturally different from those who live in their home countries. For example, suppose you are an expat, and you pay tax in your home country (sometimes referred to as onshore). In that case, you can usually benefit from tax relief on contributions into approved pension schemes and retirement funds. However, this option is not available to many expats, particularly those living in China.

If you live offshore, you have expatriated to a foreign country, and you currently pay tax there, so it is crucial to start saving for retirement while working abroad. This is particularly important as many expats living in Asia find themselves with increased disposable income. This desirable situation provides the perfect opportunity to boost their money or financial assets by pursuing offshore investments, for example.

Fortunately, there are some great options for retirement planning and managing pension schemes available to expats in Asia. I hesitate to use the term ‘offshore‘ as this can have negative connotations and is off-putting for some people. But offshore investing means that the investment is held in a tax-efficient investment area other than your country of residence for tax planning purposes. Therefore, these vehicles are perfectly legal and cater specifically to an international expatriate clientèle who doesn’t necessarily benefit from an employer’s pension scheme.

The good news is that they also offer many advantages. Let’s take a look at the main ones.

Nine Advantages of International Investment Vehicles Available to an Asian Expat

Accessibility

The investments that an expat makes within these kinds of funds are more accessible than those in typical pension plans, such as a company pension, around the world, which usually tie in your money until you reach the age of 55 at least. Even if your company uses multinational firms to ensure expats don’t lose their company pension when changing jobs, foreign pensions and offshore investment options may still pose more benefits to accumulate enough money for a comfortable retirement.

Instead, your retirement savings will grow in tax-free funds, which you can access at any time up to your chosen retirement date (subject to policy/fund conditions). It is, therefore, a valuable asset within your investment portfolio and aids in forming coherent financial plans.

International investment vehicles, such as international savings accounts, are usually somewhat less flexible in terms of access. However, it is worth noting that expats have the option to begin building their pension plan at a much earlier age than you would be able to in most parts of the world.

You maintain control

In consultation with your financial adviser, you take control and decide where every penny of your pension savings is invested. As an expat living in China, you have low-cost access to an enormous range of investment funds designed for expatriates and the flexibility to adjust your portfolio to meet your changing requirements at any time.

International investment vehicles are becoming increasingly popular among expats in Asia, especially with people who have homes or other investments in their home country. They are designed to offer expatriates the opportunity to invest in their retirement and their family’s future financial security.

Offshore investment is another way in which you can diversify your sources of income. In addition, these vehicles offer you a degree of flexibility when managing your pension fund that is rare even in traditional pension plans in most countries worldwide.

Currency flexibility

These retirement saving vehicles offer the opportunity to save in different currencies and have significant tax advantages. This can be especially useful if you live in a jurisdiction where the money is volatile or if you are planning on retiring in a different country.

For expat citizens, particularly those living in Asia, international investment routes are an opportunity to invest tax-effectively. A global investment fund is usually domiciled offshore, which means that you can avoid many taxes, including taxes on income and capital gains compared to your country of residence. Many of these funds will also allow you to pay minimal taxes when selling units because they trade frequently. This tax situation is more favourable and helps those who might face double taxation in their new country and their native country without the possibility of a tax break.

Perfect for expats who move around

These funds are significant for nomadic expats who may move from country to country several times throughout their time abroad. Investors can both contribute and withdraw wherever in the world they are based despite being a citizen in their home country.

International investment vehicles offer you the flexibility and liquidity essential for the modern expat’s personal pension plans in other countries. As a result, they are becoming increasingly popular among people who have homes or other investments in their home country while living abroad. They are an essential part of financial planning for expats and have significant financial implications in the long run.

Freedom of choice in financial planning for expats

With proper financial planning, you can build and create the retirement you would like by setting your own monthly savings amount and your retirement date rather than being dictated to by a government. In addition, international investment vehicles allow you to choose your investments and even your financial adviser, which means you take more control over your savings, pension funds, and investment plans without worrying too much about taxes, like income tax and capital gains tax.

Another example of retirement plans is international investment vehicles which are another way to diversify your sources of income. Something like an international savings account also provides greater currency flexibility than other saving methods, making them an attractive option for expats who live abroad and regularly move between different countries. International investments offer tax efficiency; they usually have flexible access rules; they enable the investor to develop assets that match an individual’s circumstances. They keep management costs down while giving investors complete control over them.

This also means greater access and control for unexpected financial obligations and better returns on currency exchange rates. Setting your own financial goals will also expand your investment options to better cover living expenses for expat life. You will also have more access to financial opportunities in different markets and will not always have to rely on local banks.

Continuity of your financial planning

An offshore retirement fund offers the ability to invest and stay invested in the markets even if your tenure overseas is short. This will help you remove any gaps in saving for your retirement. Eliminating these gaps is reasonably necessary because, as many expats discover, an initial overseas posting of three years often turns into ten, and none of us can afford to miss ten years of saving towards retirement; in fact, to do so can be catastrophic.

For economic reasons, it is always a better idea to maintain continuity in expat financial planning while living abroad. Aside from tax benefits, expats invest time and energy into international financial decisions. Expenses like travel insurance in a different currency can add up over time and put a strain on finances if it is not properly managed. Different countries will have different rules about insurance and matters like a health care plan, and all of these situations can accrue financial implications over time.

No drawdown restrictions

You can take any amount of your retirement plan as you wish and even opt to take your entire retirement package in cash instead of being restricted to 25% of the fund. International investment vehicles offer you a degree of flexibility when managing your money that is rare even in traditional pension plans in most countries around the world. Therefore, it eliminates the need to search for the best countries for the purpose of expat financial planning.

Income without restrictions is usually flexible about what payment they will accept from investors. For example, most international investment funds will take an unlimited amount of guaranteed income and a large portion of capital withdrawals, giving you more choice over how you spend your retirement fund upon reaching your set retirement date.

It’s important to remember that international investment vehicles may not be suitable for everyone. International investments can be complicated and riskier than traditional savings methods such as pension plans or mutual funds. They should not be seen as a substitute for a pension plan because they do not guarantee you will get the total value.

Foreign retirement account distributions can also become tricky, and you might need to pay taxes and file a tax return on such investments. If you are unsure, contact Infinity today for a consultation with an expert financial advisor who can help you determine the ideal financial plan to suit your needs. We have key information about international investment options and a good understanding of living expenses for an expat abroad in Asia. We can offer professional advice whether you are self-employed or just enjoying life in a business overseas.

Annuity not required

Once you reach retirement age, you will have several options with pension funds of this kind. You could leave the pension savings invested, cash it in or take out an annuity, but the important thing is that the choice is yours. You will not be forced to purchase an annuity, as is the case with certain pension providers regarding an expat’s contributions.

Asia has some of the best countries to retire comfortably in, so it is only natural that you would want to invest money into your retirement in one of these countries. This is where proper expat retirement planning comes in for someone who is living abroad. Doing this entirely on your own can be daunting, so contact a financial advisor who can help you set up a professional and inclusive financial plan that can bring stability and balance to all your foreign accounts and diverse financial affairs.

Uncertain about tax laws, inheritance laws or your responsibility to a family member in a new country? Infinity’s experienced financial advisers can help!

Transferability

It is good to have pension planning so that when you eventually die, the residual fund can pass to your wife or family according to your wishes with no problem. Furthermore, international investment vehicle funds are transferable from one jurisdiction to another, and some offer the option of monthly income. In addition, international investments can give expats greater freedom and flexibility when choosing where they live and where they invest their money.

Saving for retirement can be a challenging and frightening prospect for many, but as a professional financial adviser, I’m here to help. If you’d like to discuss the possibilities available to you as an expat living in Asia, I’d love to hear from you at jordan.donald@infinitysolutions.com.

 

A final word on Financial Planning

If you are unsure what to do with your taxable income while living abroad, or you are not even sure whether you should be paying taxes or whether the inheritance laws will permit you to will your remaining retirement funds to your family, then you should probably get in touch with a professional advisor.

Expat retirement planning and financial planning can be difficult. There is uncertainty about where an expat financial status should reside, in the host country or the home country? Can online banking in the host country be trusted, and can it be accessed offshore? What is the minimum threshold for savings in the new country when I am self-employed? How many banks are there, and what is the best way to ensure that I am making money and losing money with my current income? What are the pension rights of public pensions, and is early retirement a liable option?

Each expat has their own set of questions and their own life and business requirements that may vary greatly from someone who is in a relatively similar position. Managing finances internationally can be difficult and confusing, but it is absolutely essential in life to have a financial plan that works for you. Make sure that you do not pay taxes when you do not have to. Know your responsibilities as American expats and how they differ from those of British expats, etc.

Understand when lower costs might not be better for your finances in the long run. Pay more for better products that might result in better financial gain over time rather than always going for the lower cost and never learning to grow your finances. Take charge of your life! Contact Infinity today.

To accumulate enough knowledge about the most beneficial investment decisions you can make before reaching retirement age, it is important to discuss a variety of factors with our financial advisers, including public pension/state pension vs foreign pension schemes, financing an investment in the form of a property purchase, tax relief aspects of offshore investments, the tax rules of the particular country for your personal income level.