Working around the world, how to plan for retirement?

April 26, 2012 8:43 AM

My job is contract based, and tends to lead me around the world. How does one plan for retirement with such a job?

The kind of work I do is quite specialized, and I basically work in the country that requires my skills. Shortest job length I've had has been Down Under for half a year, longest period of time is 2 years plus in London, and it may be up soon. Been to USA as well, and stints in Asia.

Currently thinking of ways to switch to a more stable footing (I enjoy my current job), but in the meantime I'd like to know if there are people also work around the world, and how they save/plan/prepare for retirement.

Thanks!

posted by TrinsicWS to work & money (6 answers total)

Based on my own inquiries in this area it would be useful to know your citizenship and where you pay tax.
posted by oliverburkeman at 8:53 AM on April 26, 2012

Here's my plan: save enough to buy a farm, get self sufficient, and scale back the income gradually. Transition form wage worker to subsistence farmer.
posted by Meatbomb at 9:11 AM on April 26, 2012

@oliverburkeman: I'm from Asia, don't pay tax in my home country as I have zero income there. Only pay the tax where I work at.

@Meatbomb: My sibling suggested that actually, no joke. My main issues with that are lack of saxophone/piano teachers in the areas we've looked at.
posted by TrinsicWS at 9:26 AM on April 26, 2012

I'm location-independent and planning for retirement. What has worked for me:

1. As you travel to each place, consider whether you'd want to retire in that country. Research the cost of living, quality and cost of health care, ease of getting residency, current level of inflation, etc.

2. Choose a country that seems appealing or at least representative of the appealing countries and figure out how much annual income you'd need to live there.

3. Use a calculator like this one to find out how big a pile of money you need to accumulate.

4. Start putting money aside to build that big pile, following the usual investment and tax advice that applies to your situation. If you get a steady paycheck, it might be easiest to set up a method to automatically transfer X% of each paycheck to an investment.

Specific investment advice would depend on your age, tolerance for risk, etc. etc. But the first step is to figure out how much money you're going to have to accumulate to retire when and where you want. Then you can focus on building up that pile of money.
posted by ceiba at 9:30 AM on April 26, 2012 [3 favorites]

It would be nice if you could incorporate as a business, invoice your clients, receive payments, and invest the money within your business and grow it from there. My husband is self employed (though not a globe trotter) and this is how we approach his retirement. By building the company we are building up assets that we can use later on (also, we only have to pay corporate tax on them, not personal tax).
posted by crazycanuck at 2:34 PM on April 26, 2012

I'm kind of in that situation, although I've now been in one place long enough that I am starting to wonder if I might stay here for good. But before that my husband and I lived and worked in six different countries, each for a period of no more than a year or two and planned to do that indefinitely.

For one thing, we assume that we will not ever have access to compulsory retirement savings, i.e the stuff that various countries take out in your tax and put in some retirement scheme. At one point we had six different schemes like that, each with a few hundred or a couple of thousand dollars in them. Most won't pay out even at retirement unless you reach a certain minimum threshold, and some are very difficult to roll into an overseas scheme. So we just count that as lost money, although we will do our best to retrieve it if possible.

So you are on your own for savings. Basically our plan is just to save a bunch of money, keep it somewhere that earns reasonable interest, and call it a day. In some countries you can access tax-free savings accounts for private retirement savings purposes that let you take the money out if you can prove that you have emigrated. These are good. Sometimes they will tax you at that point of withdrawal, but it's still sometimes less than you would have been taxed if it had not been tax-free while you were saving.

Otherwise, just sock away everything you can into savings accounts, term deposits (CDs) or diversified investments. We try to live on half our income and save the other half. Before we bought a house last year, we had saved $350,000 this way (over nearly 20 years, admittedly). Now our plan is to pay off the mortgage quickly, and then keep saving. We probably will move on again in a few years, and then sell the house, retrieve most of the money we put into it, if not make a small profit, and put that back into savings accounts. We know we can live frugally, so as long as we can purchase a small property when we retire, we don't need much more money, and if we've saved a million, the interest off that should be fine.

Oh and sometimes you can get exemptions to compulsory retirement savings/tax if you are on short term contracts and not a citizen. We got this in Denmark, and here in Australia you can turn your contributions down to a minimum (7%, I think). The key is, when you do this, to make sure you do stash the money this saves you somewhere, not just spend it.
posted by lollusc at 4:53 PM on April 26, 2012 [1 favorite]