Client retiring abroad
Retiring overseas turns a domestic retirement plan into a cross-border one.
The client may need to coordinate pensions, investments, tax residence, healthcare, currency, property, banking and estate planning across more than one jurisdiction.
Josh Clancey works alongside tax advisers, lawyers, pension specialists and other professionals where a client's move into retirement creates wider international financial-planning decisions.
Retirement location changes the planning framework
Where the client chooses to retire can affect:
- how pension income is taxed
- which currencies they spend in
- whether existing investment accounts remain available
- healthcare costs
- banking arrangements
- property decisions
- beneficiary planning
- estate exposure
- the order in which retirement assets are used
That means the retirement plan should be built around the intended destination rather than simply around the client's current asset mix.
Where the destination is not yet fixed, the plan should preserve flexibility rather than over-optimising around one country too early.
Common planning areas when a client retires abroad
UK pensions
A UK pension may remain one of the client's core retirement assets after relocation.
Tax treatment, withdrawal strategy, provider access and currency all need to be considered.
US retirement accounts
401(k)s, IRAs and Roth IRAs may remain in the US while the client retires elsewhere.
Multiple currencies
Pensions and investments may be denominated in currencies different from the client's future spending.
Tax residence
The client's destination can determine how pensions, investments and withdrawals are taxed.
The relevant tax adviser should establish the residence and treaty position.
Healthcare and protection
Retirement abroad can change access to healthcare and the relevance of existing insurance arrangements.
These costs should be reflected in long-term cash-flow planning.
Estate and beneficiaries
Retirement overseas can leave assets and beneficiaries spread across several countries.
Questions to ask before a client retires abroad
Where does the client expect to spend most of retirement?
The answer affects tax, currency, healthcare and estate planning.
What secure income will the client receive?
Defined benefit pensions, state pensions and Social Security should be identified separately from investment assets.
Which currencies will fund retirement spending?
Currency mismatches become more important once regular withdrawals begin.
How will pension income be taxed?
The relevant tax adviser should establish the residence-country and source-country treatment.
Can existing investment providers continue to service the client?
Operational restrictions can affect the practical use of retirement assets.
What will healthcare cost?
Private insurance, local systems and out-of-pocket costs should be incorporated into the cash-flow plan.
What happens if the client later returns home?
A retirement plan should consider the possibility that residence changes again.
Professional resources for clients retiring abroad
The Document Centre includes technical briefs, professional guides and practical checklists covering international retirement, pensions, multiple currencies, cross-border estate planning, clients moving country and internationally held retirement assets.
Useful resources for advisers working with clients retiring abroad
The Professional Adviser's Guide to International Retirement Planning
A broad guide to coordinating pensions, investments, tax, currency and future residence.
Client Retiring Abroad Checklist
A practical checklist covering pensions, investments, residence, currencies, healthcare and estate issues.
The Professional Adviser's Guide to Cross-Border Financial Planning
A wider guide to the financial-planning challenges created by internationally mobile clients.
The Professional Adviser's Guide to UK Pensions for International Clients
A useful resource where UK pension assets remain part of the client's retirement plan.
401(k) Planning for Clients Living Outside the US
A technical brief for clients retaining US employer retirement accounts while living abroad.
Cross-Border Referral Checklist
A practical resource for identifying wider planning issues where retirement spans jurisdictions.
Withdrawal sequencing becomes more important in retirement
Once the client stops working, the question changes from where should we save? to which assets should we use first?
A retirement income plan may need to coordinate:
- defined benefit income
- state pensions
- 401(k)s
- IRAs
- UK pensions
- taxable investments
- cash reserves
- property income
The order of withdrawals can affect tax, investment longevity, currency exposure and estate outcomes.
There is no universal sequence.
The right approach depends on the client's residence, asset mix, tax position and future spending needs.
The retirement plan should be tested, not assumed
Cross-border retirement planning benefits from cash-flow modelling because several risks can interact at once.
The plan can test:
- higher or lower investment returns
- inflation
- longer life expectancy
- currency movements
- one-off expenditure
- property purchases
- healthcare costs
- earlier retirement
- delayed state benefits
- changes of residence
The purpose is not to predict the future precisely.
It is to identify whether the client's plan remains resilient if the future is less favourable than expected.
When should the referral happen?
A referral can be useful where the client:
plans to retire in another country
has pensions in several jurisdictions
expects to spend in a different currency from their assets
is approaching retirement
needs a withdrawal strategy
is considering buying property abroad
has healthcare or estate-planning concerns
may move again later