Plan early for your twilight years

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Plan early for your twilight years

Failure to save enough will result in most people having to downsize retirement ambitions

By David Hughes

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Published: Sun 27 Sep 2015, 12:00 AM

Last updated: Sun 27 Sep 2015, 7:49 PM

It is likely - and indeed sensible - that you have contemplated your retirement a fair bit over the years.
However, seven to 10 years before you plan to retire, you really should bring your retirement into the front and centre of your mind. This is because you'll probably have your retirement expectations and desires more sharply defined, plus you will be able to hone your strategy more accurately to ensure you are able to fulfill your ambitions.
With this in mind, there are three important questions you should ask yourself - and answer honestly.
Are you saving enough?
It is our experience that most people are unrealistic about how much they will need to save to maintain a comparable lifestyle throughout their retirement.
Savings need to stretch further than ever before due to rising life expectancy, the cost of living on an upward trend, the low interest rate environment, rising care and medical costs, and the fact that it is inevitable that governments will not be able to financially support retirees in the future as they might have done for previous generations.
The time to act is now - remember there are typically only 120 paydays in 10 years - so the earlier you start planning, the easier it is to achieve your long-term objective of being financially secure in your mature years. 
Failure to save enough will likely result in most people having to downsize retirement ambitions, or continue working beyond the point at which they'd hoped to have retired.
As an expat, there are many financial solutions that allow you to use your "expat status" to help you become financially successful - and to save. One way is to invest in a regular savings plan. Offshore savings plans offer an excellent way to get a better rate of interest than is available from most onshore alternatives. Many of them are multi-currency, allowing you to save in the most favourable currency and withdraw cash or write cheques in any country.
Are you properly invested?
As you head towards retirement, the traditional strategy has been to reduce exposure to investment risks - which is to say, in many cases, decreasing your exposure to equities and increasing your exposure to government bonds and cash and other perceived safe-haven assets.
However, bearing in mind the eroding effect of inflation, historically low interest rates, and the possibility your savings will not last throughout your retirement (that you will outlive them), there are also serious unintended consequences for being too risk adverse.
The best solution is to ensure, with the help of an independent financial adviser, that you have a gradually progressive and properly diversified portfolio that is age appropriate, and one that takes into account your time horizon, personal financial circumstances and tolerance to risk.
Is your pension really going to work for you?
When you give up work, you'll be living off a fixed income and, therefore, it is imperative that your pension is really working for you so that you can maximise your retirement income.
There are a variety of different ways you can ensure that your pension is efficient, and the option(s) you choose will depend on your personal circumstances.
Not all solutions are suitable for everyone, of course. But an increasingly popular way that expats of all different nationalities with British pensions, for example, are pursuing is by transferring their UK pensions into HMRC (Her Majesty's Revenue and Customs) recognised QROPS (Qualifying Recognised Overseas Pension Scheme), which are based in flexible, secure jurisdictions outside the UK.
Since they were established in 2006, there's been a year-on-year growth in demand for overseas pension schemes - and it is an upward trend that looks set to continue and develop even further as more and more people realise the enormous benefits, and as the market and industry mature.
There are many compelling advantages of a QROPS. Among others, these include that a QROPS provides you with more control over your pension fund investments, you can also combine various smaller pensions into one large pot, you can choose which currency you receive your income in, and you can leave the rest of the fund to your beneficiaries without any deduction of UK tax upon death, as long as you have spent five years or more living outside the UK.
There is a lot more than the questions above to consider between now and your retirement. You should try and revisit these points above, and many more, including the issue of lifestyle and property, several times in the coming years.
You may not have all the answers right away but asking the big-picture questions will help you shape the decisions you will need to make when the time comes.
The writer is divisional manager for the Gulf region at deVere Group. Views expressed by him are his own and do not reflect the newspaper's policy.


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