Retirement years can be the years that one can finally rest and enjoy themselves, or it can also be financial hard times, if one is not adequately prepared for it.
For some, they aspire to leave Bolehland for greener pastures, despite Malaysia being ranked one of the best, and cheapest places to retire in the world. According to HSBC’s Life After Work survey, 34% of those who aspired a retirement abroad were left disappointed due to financial constraints.
If you are thinking of retirement at the Bahamas, here are some things you need to consider:
1. What’s the cost of living like?
Retiring abroad usually requires more money than retiring locally, especially if the exchange rate is against you.
Depending on where you would want to retire, it is essential to work out the necessary monthly living expenses that you may need by the time you retire.
Working out the savings needed for retirement can be complicated, as there are various factors to consider, such as cost of living, exchange rate and also the inflation rate.
To illustrate hypothetically, let’s take Melbourne as a retirement destination to retire as is rated as one of the best place to live in the world.
Assuming that a person retires at the age of 60, lives up to age of 75, have no medical complications, and the living expenses are estimated to cost around AUD$30,000 a year (higher bound, rough estimates taken from Numbeo).
2. How much do you need?
Here is how much it may cost in this scenario:
Estimated cost of living x Retirement years x Average exchange rate
AUD$30,000 x 25 years x 2.85*
= RM2,137,500
*Based on exchange rate of January 26, 2015)
That’s not even taking inflation into account yet!
This is why it is important to start saving and investing as early as possible to grow our wealth. If you want to retire abroad in a location that costs more compared to Malaysia, you have to go the extra mile to achieve it.
Consider consulting a certified professional financial planner or retirement expert to help you achieve your goal.
3. The legal aspect of it
Most countries offer economic citizenship investment programme, like Portugal. The idea is for affluent high net worth foreigners to invest a certain amount of money into the country and help spur the country’s economy, and in return they get permanent resident visa for themselves, and often their family too.
Other ways are retirement visas or residency requirements. For example, our country has the Malaysia: My Second Home Program.
You should also take into account the expatriate process of your income and assets: the inflow of money may be restricted or subject to taxation by the host country (the country you want to retire in).
Be sure to check the credibility and authenticity of the agent or company you are dealing with by referring to multiple sources online and related host government websites.
4. Tying loose ends
Once you’ve worked out the above points, and are about to embark on your retirement journey abroad, you will have to settle any outstanding affairs in Malaysia.
If you own properties, you can consider selling them and bring the cash with you or rent them out to continue to have a passive income. If you decide to rent out your properties, you need to engage an agent or a property manager who can manage them for you when you are out of the country.
With insurance policies, you can choose to either liquidate the Malaysian insurance and buy a local insurance at the host country or extend your current insurance policies to international coverage.
The idea retire abroad with a peace of mind.
Retiring abroad sounds like a great plan, but it takes a lot of planning, saving and discipline to be able to achieve it. If you aspire to retire in the Bahamas, better start cracking on the retirement planning!
