Can I afford to retire is the question many retirees are asking, particularly in these days of economic crises. Many people have put money in retirement funds over a number of years only to find that the stock markets have taken a nose dive and have dwindled their opportunity to receive a decent income in their later years.
However, there are some positive options available where just when you were thinking: "I cannot survive. What can I do? Let's take an example of Steve, a 50-year-old, who has been putting away his savings for a number of years and wishes to retire early.
Steve has decided that instead of living in his home country, the UK, he wishes to move to a warm, hospitable climate with good medical services and numerous golf courses (his favorite pastime), so his money can go a lot further.
• House in the UK sold for 220,000 pounds
• Bank account: 50,000 Pounds
• Shares 30,000 (down from 50,000 in value)
• UK pension fund which is transferable 220,000
• Once reaching 65 he will also get his government pension, again transferable
Many people don't realise that quite a few pension funds are transferable with the option to leave it in the UK until later, or converting it into a annuity (all UK pensions are taxable).
As an alternative, Steve could transfer his pension fund into a Qualified Recognised Pension Scheme (QROPS). These funds have been around a while and have an EU directive backing.
The advantages of the funds are:
• Pension drawdown is available.
• No obligation to ever buy an annuity
• No UK tax to pay
• Wide choice of tax-free jurisdictions to invest in
• Investment available to bequeath to heirs
• No inheritance tax on the lump sum left to heirs
So in this scenario, Steve has decided to transfer his pension into QROPS and structures the balance of his transfer into an offshore personal portfolio band (OPPB). This vehicle enables him to transfer his remaining assets into the bond which allows him to manage his assets.
These shares can be kept in their original currency (pounds sterling). Steve has decided to keep 30,000 pounds in a Thai bank account, which allows him to receive a Thai retirement visa and for expenses.
He decides to transfer the rest of his cash into the OPPB, which is placed partially into fixed-interest investments and the remainder to be dollar-cost averaged into the markets over a year (markets are chosen carefully to spread any risk factors and include commodities, property income, futures and gold).
Steve will gain enough from his QROPS to have a great lifestyle in Thailand and has the flexibility to move with the markets thus allowing him to retire early and be able to afford it.
