21st Century Retirement: How to Plan For Your Future

Most of the people we speak with at Black Swan Capital are working professionals. They are living busy lives outside their home country and seeking ways to effectively build their wealth so they can enjoy financial independence in the future.

Whether we speak with clients in their 20s, 30s, 40, or 50s, nearly everyone finds long term retirement planning, or future proofing an important goal. It is a good reinforcement that it is never too early, and never too late to start planning for your long-term future, whatever you want that future to look like.

Future planning is complex. In this article we address some of these complexities for expats in Europe, highlight some of the challenges and changes, and address what you can do and how Black Swan Capital can help. We will expand on this in articles over the next month and look at approaches specifically for Gen Xers, Millennials, and Gen Z.  We touch on 6 societal factors – job security, career changes, government pensions, pension gaps, longevity, and inflation- and if that isn’t enough overlay this with being an international professional.

What is true is that the nature of retirement has changed. The way our parents or grandparents looked at retirement is now an exception to the rule. What was the old way? It was get employed at 21, work with a firm until you are 65, then stop work, collect your pension and sit quietly at home.

Not now. For one, job certainty has evaporated. Not only can most professionals expect to change employers many times, they may change industries and professions, and may even spend some time self-employed. Research suggests a member of Gen Z can be expected to have 5 to 7 careers in their lifetime and perhaps 16 different jobs!

The way governments around the world view pensions has also shifted. Two or three generations ago, one could expect a reasonable government pension to subsidise cost of living in your latter years. Pensions are now increasingly in the individual’s hands. Government pensions are being reduced, means tested, access restricted, and deferred until you are older. Employer and individual contributions are becoming increasingly important, managed in a regulated and restricted manner, but with more choice in how it accrues so you are responsible for how much you build up across your working life.

Then we can add the layer of complexity of being an expat in Europe. If you are living outside your home country, your pensions back home may be frozen with no new additions. You may or may not be building up new pensions where you are or you might incur that common risk of the pension gap. A pension gap is that period when you are not receiving any pension contributions. This can have a material and compounding impact on your future plans.

One more layer, we are living longer. Your non working life may be almost as long as your career. That is a long time to live on savings, and we haven’t mentioned inflation yet. We will expand on longevity, the pressures of quality of life and quantity of life, and the eroding impact of inflation in future retirement articles.

Focusing on the conventional inputs to retirement planning- pension accumulation- we have illustrated that it is more complex for expats and good advice is important.

As an expat, we encourage you to optimise the pension structures as they exist where you are, and the trail of pensions you may have around the globe. In addition it is important and prudent to utilise other non-pension structures to help to get you to your goals. The starting point is a good financial plan constructed specifically for you.

Before you can start your plan you need know where you want to go. Spend time thinking about what retirement means for you- where and how you want to live, how you plan to fill your days, whether you want to keep working, gradually transition to retirement, what will drive and fulfil you. Know your goal. Without a goal you will never know if you are on track, or even on the right track. You will also never know if you have reached your target.

When the targets are set we can help you turn them into quantifiable targets and then compose the plan to help you to get from where you are to where you want to be. This is how 21st century retirement looks. You have the onus to prepare yourself for your latter years, but you also have the freedom to define how to live it. For something as important as this, it neefds to be given time, effort and focus. Start planning early, get professional advice, and work with someone like Black Swan Capital to actively track and manage your plan and your assets to keep you on track.