How Millennial expats can plan for their retirement

With more than 232 million expats living around the world, more of us than ever are choosing to leave our native countries for a fresh start in a new territory. 

For Millennials - that is, anybody born between the mid-80s to mid-90s - the idea of packing a bag and heading off to explore the world has never been more attractive. And with the political uncertainty from the UK’s decision to leave the EU, and constant immigration talk in the United States, getting away from it all and moving to a new country as an expat makes sense.

Being an expat not only allows you to earn money and see the world, but it opens up new doors, gives you new career prospects and enables more affordable living.

However, whilst an expat lifestyle has a whole host of positives, it’s important to consider your long-term goals. It’s great to live in the here and now, but being away from your native country without the promise of a state pension means you need to think about growing old.

In this post, we take a closer look at how you can plan for your retirement as a Millennial expat.

Top tips on saving for your retirement

Planning your future

Whether you’ve just finished college or you’ve got a job in another country and you’re ready to settle down with a family, it’s essential that you plan for your future as soon as you can. Indeed, knowing where you’re going to be living in ten years’ time will allow you to make more sensible decisions when planning for your retirement and get the most out of your money.

First, think about where you'd like to live when you retire. If you're an expat and you've settled in one country, then consider applying for citizenship in that country. If you're living in one country but plan to retire in another, consider the cost of living and decide how much you'll need to save.

You should also think about your age of retirement. Sure, you might be in your prime right now, but having an idea of when you'd like to retire can help you calculate how much you need to put away. Many expats want to retire early so that they can make the most of their lives in the sun.

When planning for your future, also think about major changes or expenses. If you're having a child, for example, you may need to budget for their education or put money aside to help them buy a property.

Writing a will should also be a priority to ensure you can pass on your wealth to loved ones. Make sure you understand local laws and work with a solicitor to finalise your will.

Considering a state pension

If you’re from the UK but live and work in another country, you might be able to pay National Insurance, which will protect your State Pension and ensure your entitlement to benefits.

If you're working in a country with bilateral Social Security agreements (Barbados, Bermuda, Bosnia-Herzegovina, Canada, Chile, Croatia, Guernsey, Israel, Jamaica, Japan, Jersey, the former Yugoslav Republic of Macedonia, Mauritius, Montenegro, New Zealand, Philippines, Republic of Korea, Serbia, Turkey or the USA) then you may be able to pay your contributions to the UK rather than the country you're working in, protecting your benefits and State Pension.

Can you contribute to a State Pension where you’re living as an expat? Unfortunately, there’s no straightforward answer. Contact your local government and HMRC to find out.

Investing for your future

When you're working, you should look to build up your savings as well as contribute to a private pension. However, whilst it's good to have money in the bank, low deposit rates could have an impact on your savings, so finding different ways to grow your wealth makes sense.

Making smart investments and having a diverse financial portfolio can help to protect your future - but it's up to you how much money you choose to invest, and how much risk you want to take.

Depending on where you're living, you might be able to enjoy the tax benefits associated with saving and investing offshore. You should speak with a financial advisor to find the best solution for your funds, but bear in mind that there's always a level of risk associated with investments.

Protecting your wealth

You may be young and full of energy today, but circumstances can change overnight. If others depend on you financially, then taking out a life insurance policy is a sensible idea, as it gives you peace of mind that, if something did happen to you, your loved ones would be comfortable.

As an expat, however, finding the right life insurance and critical illness cover can be difficult, as costs can vary from country to country, and protection is not guaranteed if you choose to move to another country. Look for a global protection plan to keep you covered, wherever you live.

Consider your inheritance

One of the easiest mistakes you can make when planning your retirement and Will is to assume you'll be covered, whatever country you're living in. However, the chances are that you have a property, a car, a bank account and a whole load of possessions in a new country, and there's no guarantee that your Will will automatically be valid unless you adhere to local laws.

If you want to ensure that all of your assets are passed on to your family, you should work with a solicitor to cover your worldwide assets, or consider making multiple Wills for different countries that follow local laws. If you don’t, your assets might not be transferred to your intended heirs.

Wrapping up

Retirement might seem like a lifetime away, particularly as a Millennial. However, we’re living longer than previous generations, and so planning for your future will serve you well and ensure you lead a comfortable, stress-free retirement, wherever in the world you decide to live.

Check back to Money Saving Expat soon for more financial advice and top tips for living abroad.