Save now to ensure you really do have a rosy future.
Don’t take your money regrets into retirement
One of the most universally popular songs has a message of defiance that appeals to us all. Who doesn’t feel a little taller, stand a little straighter on hearing the French sparrow, Edith Piaf, rolling her Rs as she sings, ‘Non, je ne regrette rien’ in a voice full of courage and resolve? So, it’s a great shame to learn that there is a shared regret for so many of us on reaching a certain age - when we discover we haven’t saved enough money for retirement. Here, David Russell, managing director, Guardian Wealth Management, UAE, explains why not saving enough money should not be one of your future regrets:
US and Asian investors reveal themselves to be finely tuned to a strategy of long-term investing in equities for when their lives slow down. A recent Gallup poll found that well over half of American respondents say they are planning to rely on investment in stocks and shares to fund their retirement which is over three times more than the equivalent number of Brits. Over in Japan, a similar survey found that as many as 33 per cent of already retired Japanese managed an equity portfolio to meet their long-term saving needs.
The same cannot be said of the UK’s attitude to long-term saving. TD Direct Investing’s annual Investor Confidence survey reveals that as many as one in three retiring British investors admit they regret not saving more money. One in five regret not taking advantage of investment opportunities when they had the chance. And the survey comes up with evidence that the next generation is heading for the same level of regret as today’s newly retired with four out of 10 admitting they are not currently making any financial provision for their retirement planning.
As an expatriate saver you would be wise to set aside time to check and revise your pension plan to be confident that it’s on course to deliver the kind of income that will fund your intended retirement lifestyle. To begin at the beginning, you will need to work out what sum of money you need to have saved between now and your retirement date. Deduct from this sum any anticipated state pension and any amount you have already saved up through a company and/or personal plan. The total you arrive at will be your shortfall which you can then break down into a target figure for your monthly and yearly contributions between now and your retirement.
When you begin pension planning, or if you wish to revise your current pension position, seek advice about the best offshore jurisdiction in which to base your portfolio. Together with your adviser, you’ll want to assess all the available investment options. Your adviser will help you make comparisons between the various international plans that are capable of offering well-balanced and well-diversified holdings. These will include a range of asset types such as equities, bonds, property and so on, across a range of markets and sectors. Your adviser will check that the plan is appropriate for your tax and residence status and that it is flexible enough to accommodate any lifestyle changes you might make over the years.
Around 10 years before your retirement, seek advice again as to how best you can reduce any risk in your portfolio holdings ensuring the investment spread remains well diversified. If you know your retirement location, establish a strategy for streamlining assets into the relevant currency - that’s the currency you’ll use for your retirement spending. And three years before retirement, obtain valuations on all your savings, while updating your records on any debts. Work out a strategy with your adviser to switch assets into cash instruments thus reducing risk even further. Now you can begin a conversion process into the most appropriate currency.
Such a plan will ensure you’ll never need a pillow to sob your regrets into. You’ll be able to sit back and enjoy your retirement on a well-stuffed cushion.