Thinking of moving from Singapore? If so, you’ll need to have your personal finances in order to accommodate the change. It’s common for expat families not to return immediately to the country they’re from but rather to live in a succession of countries. Whether you’re heading to another post, taking up a new job back home or planning to retire, taking stock of what you spend, where you spend it and how much you’re going to have coming in are important considerations. We asked Andrew Talbot of Avrio Wealth, to run us through a case study of one client couple who are coming to the end of their time abroad as expats.
Who they are:
Mr and Mrs X have been away from their home country for 30 years. Their two children who grew up as expats and are now both living in Europe. They also have grandchildren on the way. Originally from Australia, they want to maintain a presence there but also in Europe to be near family. They have built assets all over the world during their expatriate life – property in three different countries, pension pots in two countries, multiple bank accounts and a couple of investment portfolios.
What they should consider:
#1 Targeted budgeting
Day-to-day costs will change as the couple moves between the two jurisdictions, so understanding what they need to spend in each country is important. The money that they will have to continue spending will be in two currencies. Regularly looking at their bank statements to see what’s going in and out will give a good idea of spending.
#2 Checking existing retirement benefits
With two retirement plans built up during the working years, they will have different pension benefits and dates. It’s important to make sure the funds are invested in line with the time that they will draw down these funds. Planning this sequencing will show whether parts of the retirement portfolio need growing or if parts need to be ready to be spent. It’s also worth checking the charges that they are paying on each pot. They’re likely to become more risk-averse as they get older, but understanding when they will draw the investment will help them see the risk of the portfolio. With this particular couple, Expat Financial Planning checked the death benefit nominations on their pension plans to ensure they matched their estate planning.
#3 Determining if income is sufficient
The couple should be aware of the minimum amount they need to survive on when work stops. Expat Financial Planning used a planning software to establish their point of financial independence – that is, the point at which they’ll have enough to maintain their desired lifestyle for the rest of their lives.
#4 Finding out when and what taxes need to be paid
Having assets in different countries makes tax planning complicated. Each asset will have a different tax rate and, for some, worldwide tax is applicable. Minimising the amount in each country will mean more income can be spent to enjoy life. After inputting the couple’s assets into their plan, Expat Financial Planning was able to calculate the amount they could retire on after the tax position was accounted for.
#5 Making a will and considering Powers of Attorney
The couple will want to make sure that their estate is divided up as they wish following their death. They should consider putting in place Powers of Attorney so that their affairs will be handled the way they want.
#6 Having ready-access savings
Just because you’ve stopped work doesn’t mean that emergencies won’t happen. It’s best to have at least three to six months of income on hand.
#7 Giving gifts to the family
Giving gifts to children and grandchildren is possible if it doesn’t affect their longer-term cash flow. This was part of the couple’s estate planning and it helped the children get on to the property ladder and pay for school fees for the grandchildren.
Knowing that you won’t run out of money when you retire offers you the freedom to enjoy it. The result of predicting this couple’s income in early retirement is that they now know that they can spend more money than they previously thought. As a result, they decided to sell one of their properties – tax implications would show that they would only stay there for a brief time and instead split their time between the two locations where their children are living. They now have funds to rent a holiday home for a few years.
Set up an online consultation to see if Avrio may work out a long-term solution for you.
This material is intended for educational and informational purposes only. It is not intended to provide specific advice or recommendations for any individual. Additionally, you should consult with your Financial Advisor, Tax Advisor, or Attorney on your specific situation. The views expressed in the material are that of the author and do not necessarily reflect those of any market, regulatory body, State or Federal Agency, or Association. All efforts have been made to report or share true and accurate information. However, the information may become materially outdated or otherwise rendered incorrect due to subsequent new research or other changes, without notice. The author nor the firm are able to always verify the content from third party sources. For additional information about the firm, please visit the MAS Website at https://www.mas.gov.sg/ and the SEC Website at www.adviserinfo.sec.gov. For a copy of the firm’s ADV Part 2 Brochure, please contact us at firstname.lastname@example.org
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