3

I work on short-term contracts that are well-paid - however, not knowing how long I will be working on a job, I have got into the habit of 'making hay while the sun shines' and saving what I can to give long-term security and have been conscientiously putting money aside for the last 10 years (I am now 36).

In addition, with me and my wife coming from different countries, and us both living in a non-native country, we have very little clue where we will eventually settle down.

As I am comfortable with saving/investing for the future myself, my question is: Should I instead be making full use of maximum pension allowances to get maximum tax relief and have this compounded over the years until official retirement age? From what I understand, once you eventually retire and take an annuity from your pension you are then taxed on it as income anyway?

Alternatively -as I have been planning- should I instead continue my disciplined saving/investments to diversify and build my net worth? This way, I could build on my savings/investments and -eventually- live off the interest (minus inflation) and take retirement.

Considering that official retirement ages are slowly increasing around the world, I would ideally like to have the freedom to access my retirement income when it best suits me and my family....but would this 'freedom' would come with significant costs in terms of savings at retirement?

  • 2
    Where do you live now, whats your citizenship? This strongly depends. As I know for german citizents, if you pay for pension, you will get your pension payed out, no matther where you settle down later. The pensioninsurance doesn't care where you live, as long as you payed them. (One of my dreams :D paying the relatively high german pension contributions and migrate somewhere the pension is at least enough for a very good live when I'm old ^_^) – Sempie Aug 6 '15 at 12:02
1

with me and my wife coming from different countries, and us both living in a non-native country, we have very little clue where we will eventually settle down.

The answer depends on where you reside currently, tax rules and ability to move funds. As well as where you plan to settle down and the tax rules there.

From what I understand, once you eventually retire and take an annuity from your pension you are then taxed on it as income anyway?

Yes and No. For example if you move from US to India, stay in India for 7 years. You then move your retirement funds from US to India the entire amount would be taxable in India.

but would this 'freedom' would come with significant costs in terms of savings at retirement?

The cost would be hard to predict. It depends on the tax treatments in the respective countries on the retirement kitty.

It also depends on whether the country you are staying in will allow complete withdrawal and transfer of retirement funds without penalty.

-3

You can never depend ONLY on pension.

You must get financial education and invest your money. I recommend you to read The Intelligent Investor by Benjamin Graham...it's the bible of Warren Buffet. Besides, you don't need to be a Billionaire for retiring and be happy.

I recommend you to get education in ETFs.

I quote The Intelligent Investor by Benjamin Graham p. 131.

According to Ibboston Associates, the leading financial research firm, if you had invested $12,000 in the Standard & Poor's 500-stock index at the beginning of september 1929, 10 years later you would have had only $7,223 left. But if you had started with a paltry $100 and simply invested another $100 every single month, then by August 1939, your money would have grown to $15,571! That's the power of disciplined buying-even in the face of the Great Depression and the worst bear market of all time.

You are still young to make even bolder investments. But seriously you can never depend ONLY on pension. You won't regret learning how to invest your money, it doesn't matter if it's in the stock market, real state market, whatever market...

Knowing what to do with your money is priceless.

I hope this helps. Happy profits!

  • I have to disagree: "never say never." It depends on the exact pension plan, who it's backed by, how it's funded... While I agree that in most cases (in the US, anyway) pensions needed to be supplemented with personal savings, they should be figured as part of your investment portfolio when balancing investment types. I have some defined-contribution pension, from before IBM switched to "enhanced 401k"; for planning purposes I treat it as a bond. – keshlam Aug 10 '15 at 4:08

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.