By Danielle Porter
No matter whom you discuss your retirement plans with, they will tell you that you cannot start planning for your pension too early. While this may not be a big problem for most people who spend their lives paying into the same social security system, expatriates or immigrants who have double residency often have to take matters into their own hands. Here are a few key steps to take if you split your time in different countries and want to figure out your retirement early, presented by Retirement and Estate Advisors and Professionals.
Pay Down Your Debts
This might go without saying, but if you have any debt — especially high-interest ones — paying it down should be your first step towards financial independence. If you have credit card debt, paying it back as soon as possible should be your number one priority, as there’s no point in starting to invest when you have a fire burning through your wallet. Once you reach substantially lower than the 7 percent annual interest rate, you could slowly start looking for investment opportunities.
Still, if you’re trying to gain greater control over your finances and be less vulnerable to external forces, it might be better to pay off your debts entirely and invest your savings after getting out of your dues.
Get to Know Available International Pension Options
Large companies are starting to acknowledge the need to provide their mobile and remote working staff with international pension plans. An insurance provider or bank will invest your contributions — which are mostly always voluntary and payable in several currencies — and your employer’s contributions into funds with different risk levels. This way, you get to choose between several different investment options. This can make for significant returns , but it can also leave your provisions vulnerable to market fluctuations. So if your employer offers you an international pension option, ensure you discuss it in full detail before agreeing to anything.
Pay Your Taxes
If you are living and working in a country and still have ties to the U.S., chances are that you still have to answer to the IRS. Each country has different laws, so you need to be sure that you meet the local obligations, as well. So how can you make sure you’re not paying over (or less) than what you owe in between both residences and avoid tax trouble?
You need to stay on top of your tax situation to avoid legal issues down the road. If you have no clue where to start, reach out to Perpetual Resources for tax preparation services and more that will help you navigate the process
Take Care of Family Overseas
If you’ve been taking care of family overseas by sending them money, you need to make sure that is still doable during retirement. When you retire, incoming cash tends to slow down considerably, so make sure this is something you can realistically do without hurting your own finances in the process. For example, many companies like Remitly allow money back to your family in India for a fixed rate, which can help save you money. The more money you can save during these transactions, the better for all involved.
Downsize
As people near retirement, most choose to downsize to have more flexibility, freedom, and fewer expenses. Consider selling your home in favor of a smaller, more manageable one so you can cut down costs in both countries. Start by researching the local market to find out how much you can realistically expect from a sale or if you can afford to buy in the area.
Key Takeaways
Planning for retirement as an expatriate or immigrant tied to two countries might be a bit more complicated than one who’s lived in the same place their entire lives. However, the process is more than doable. Pay down your debts to become financially independent sooner, as well as get to know what international pension or savings plans are available. Finally, downsize and keep your taxes above board to keep your retirement stress-free.
Photo credit: Upsplash
