Longer life expectancies mean international expats must plan earlier and more carefully for longer retirements
— Chase Buchanan Private Wealth Management, the global team with expat financial advisory centres across Europe and North America, has been helping international expats manage their retirement plans and pensions for over a decade.
The International Professional Partner Firm of the Chartered Insurance Institute is regarded as a leader in independent, regulated, and trusted advice, working with clients to support informed decision-making around aspects of their wealth such as pensions, investments, and succession planning.
Having long advocated for the importance of education to ensure individuals plan properly for their retirement and have sufficient resources to enjoy the lifestyle they aspire to, the company shares insights into the effects that longer average life expectancy is having.
The Latest Data Around Global Average Life Expectancies
The World Health Organisation (WHO) has recorded steady increases in the average time people live, and the number of years the average person will remain in good health, rising from 48 years in 1950 to 73 in 2019. This trend continues, notwithstanding the impacts of the pandemic.
It has also predicted that global life expectancy will reach 81 years by 2100.
In the UK, the Office for National Statistics reports that, according to data collected between 2022 and 2024, British nationals live longer, with a life expectancy of 83 for women and 79.1 for men, which is an increase of 18 weeks from the comparable data spanning 2019 to 2021.
Alongside this, retirement ages, or the age at which UK citizens can claim the State Pension have also, of course, risen. From the previous 60 for women and 65 for men, standard retirement ages have already changed to 66 for everyone.
They are due to increase further to 67 from later this year, and to 68 at some point between 2044 and 2046.
All this means people are living and working longer, which has a knock-on effect on the pension savings they will rely on to make the most of their retirement years.
Issues Related to Insufficient Retirement Planning
Pension shortfalls can have profound impacts on individuals and families, with a report last year from Pensions UK quantifying the scale of the problem. The organisation found that a lack of planning or inadequate retirement savings affects as many as 30% of British adults of working age.
Many may find themselves dependent on benefits, needing to work longer than they would have liked, having to adjust their lifestyle and outgoings, or relying on family members to help finance essential costs.
While younger adults are generally more conscious of the importance of saving for retirement, and the introduction of auto-enrolment schemes has meant more have workplace pensions, there are persistent problems with stagnant wage growth and rising living costs that can make it harder to start saving sooner.
The Relevance of In-Depth, Personalised Expat Retirement Planning
Retirement plans are incredibly important, not least for expats who need to factor in cross-border taxation, currency fluctuations, varied tax rules and exemptions, and the cost of living in an overseas country.
It is, unfortunately, all too common for even affluent expats to underestimate the wealth they will need, or to discount the impacts of inflation, which can mean a pension pot previously regarded as healthy will start to dwindle sooner than anticipated.
Essentially, retirement planning isn’t solely about reviewing a client’s accumulated wealth, ensuring their investments align with their risk profile, and making sure that returns and asset performance contribute to a stable, well-diversified portfolio.
Expats also need to think about the other costs of living well in retirement that are just as vital as everyday expenditures. They might need to know how they will finance property purchases, whether they’ll be in a position to contribute to education fees for their children or grandchildren, and how they will finance the costs of healthcare or residential care in later life.
This becomes more complex because, in many countries, foreign nationals may not be entitled to state-funded care and will therefore need to be self-reliant. They will also almost always require comprehensive private health insurance to comply with visa requirements.
Once foreign national residents become permanent residents, this can change, but overlooking the financial burden of staying well can be a serious issue, particularly given the inevitable increases in health insurance costs as we age.
Reasons Longer Retirements Directly Influence Expat Financial Planning
Expat retirement plans encompass a wide range of aspects, from monitoring markets and portfolio risks and tapering these as individuals approach retirement to managing the complexities of cross-border taxation.
Longer retirements inevitably command higher incomes, and expats also need to consider currency fluctuations. Pensions and other assets held overseas naturally become more exposed to FX risks the longer they are held, and the likelihood of negative movements increases.
Inflation is another consequential element. A retirement spanning two or three decades means that the purchasing power of a pension or savings will erode over time, and in some cases rapidly, making growth-focused investments that outperform inflation an increasing priority over low-risk, low-return products.
Proactivity is key and ensures expats can make astute decisions without time pressures. They can then continue to track their portfolio performance long before they need to consider drawing on their retirement assets and make adjustments as necessary if returns are lower than expected, or new risks emerge.
Navigating Succession Planning as an Overseas Expat
Finally, expats may have their retirement portfolios and pensions under firm control, giving them the assurance that their wealth is more than adequate to finance their retirement. However, succession planning and potential inheritance tax exposure remain important.
With ongoing changes to inheritance taxes in various countries and the way specific assets are treated, it is important that expats ensure they have up-to-date, legally valid wills, understand how their estates will be taxed, and inform their beneficiaries of the provisions made.
They must also understand how forced heirship rules may affect their plans, depending on their place of residence, and may wish to seek professional support to protect beneficiaries from unnecessary inheritance tax charges.
Read more about Chase Buchanan – Chase Buchanan Invites Expats to Free Webinar to Help Avoid Expensive Financial Planning Mistakes
About the company: Chase Buchanan is a highly regulated wealth management company that specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, the UK and the USA.
Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15 and offers its services in the EU on a cross-border basis as per the provisions of MiFID.
Chase Buchanan Insurance Services, Agents & Advisors is authorised and regulated by the Cyprus Insurance Companies Control Service with License No 6883 and offers services in the EU on a cross-border basis as per the provisions of the Insurance Distribution Directive (IDD).
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Name: Hollie Harvey
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Organization: Chase Buchanan Ltd
Website: https://chasebuchanan.com/
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