Are you already enjoying your retirement years? Or is retirement just around the corner and you are making plans for the future?
Even if you still have some years of work to go, it is never too early to ensure your finances are on track to comfortably fund your golden years.
Strategic financial planning is important at every stage of adult life. Once you are retired and drawing your pension, you still need to regularly review your arrangements to ensure they continue to meet your goals and provide long-term financial security.
If you are hoping to live in France once you retire, you will have even more research and advance planning to do. Or maybe you are already living here and unsure of your options.
Whatever your situation, what do you need to think about now to secure the retirement of your choice?
Read more: French property and tax: 7 common questions
Approaching retirement in France?
Even if retirement is a way off, there are certain things you need to do to make sure you are on the right track, financially. Now is the time to take steps to make your dream retirement a reality.
Questions you should ask include:
Will I be able to afford to retire when I want to?
What is the best strategy for withdrawing from my business or employment?
What options will I have for my pension funds?
Will I be able to retain my existing wealth and assets?
Where do I want to spend my retirement years?
Let us say that you plan to retire within the coming years and move permanently to France. You may have concerns about whether you can maintain your lifestyle without having to sell existing assets or downsize your home. Perhaps you have a business to sell and are unsure how best to convert years of hard work into a tax-efficient retirement nest egg.
Then there are the complex residence, tax and succession implications of living in France which you need to research – you may be surprised at how different the French regimes are compared to the UK’s.
Here, professional financial advice can prove invaluable. An adviser can take an holistic view of what you have – your savings, investments, assets, pensions – together with what you want – your timeline, income requirements, legacy wishes – and an objective assessment of who you are – your circumstances, goals, risk appetite – to design a personalised retirement plan for you.
Read more: Should you reinvest your pension fund in France?
Already retired in France?
If you are already retired, you should not stop planning. After all, you could be retired for 30 years or more!
Remember that inflation can be detrimental to a long retirement. Even low inflation will have a big impact in the long term, when you will find your money does not go nearly as far as it used to.
Bank interest rates often struggle to keep up with the cost of living, so invest your savings wisely to generate enough capital growth while keeping risk to a comfortable level.
You also need to ensure that spending too much of your savings in early retirement will not have a detrimental impact on your lifestyle in later years.
Regular reviews allow you to adapt your strategy to suit your changing circumstances and goals, such as incorporating new family members, addressing health issues, or relocating. It also enables you to keep up with the ever-changing tax and pensions landscape.
Read more: Nine financial points to consider when retiring in France
What are my pension options?
Pensions tend to be the foundation of retirement, so deciding what to do here may be one of life’s most important financial decisions. UK pensions are always complex, but with all the reforms, not to mention all the options for how you take yours, you must take great care.
You might benefit from consolidating several UK pensions into one to provide a coherent, more cost-effective investment platform for your retirement income.
But you also need to consider the French tax implications of the various options and compare their tax efficiency.
Also, remember that receiving pension income in sterling when you spend euros on a day-to-day basis exposes you to conversion costs and exchange-rate risk.
British expatriates have the option of transferring UK pensions to a Qualifying Overseas Pension Scheme (QROPS). Doing so can unlock advantages such as flexibility to take income in euros and more freedom to pass benefits to chosen heirs. Transferred funds would also be protected from future UK pension reforms that may adversely affect you.
Transferring is by no means a one-size-fits-all solution and the benefits of a QROPS can vary greatly between providers and jurisdictions. Take regulated advice before making any significant pension decision to protect your benefits and establish the most suitable option for you.
Read more: Capital gains tax when selling property in France
Retiring in France
If moving permanently to France, it is especially important to review your retirement strategy early. Not only will you need to consider your residence status and the cross-border tax implications, you will also need to adapt your estate planning to suit the very different French succession rules.
Preparing in advance can reap many benefits, such as lowering taxation and avoiding France’s forced heirship rules.
For example, there are various ways of owning property in France, which can impact succession rights and tax, so explore your options and understand how they relate to your family circumstances – particularly if you and/or your spouse have children from a previous relationship, or you are not married or in a civil partnership.
In any case, careful planning is the key to minimising taxation and maximising the available opportunities, so that you can enjoy your dream retirement with long-term financial security.
