For families retiring abroad, retirement planning should include a thorough understanding of international tax obligations.
In an ever-globalizing Asia, many dream of retiring in their ideal location – whether it’s a quiet, nature-filled retreat or a vibrant, cosmopolitan hub. And they don’t necessarily want to retire in their current home.
With a growing pool of overseas-educated Asian professionals embarking on international careers, more parents are planning to join their children abroad, aiming to maintain close family ties.
In this scenario, retirement planning has become more critical than ever, particularly when it involves navigating wealth transfer across the world. Some families may plan well in advance for this transition, while others relocate without a detailed strategy, often overlooking the complexities involved when navigating different regions’ tax laws.
This can lead to unexpected surprises around tax obligations and challenges in intergenerational wealth transfer during retirement, says Jeff Yam, a wealth planner at RBC Wealth Management in Asia.
“The younger generation is telling us that their parents have moved to high-tax jurisdictions but their wealth is still sitting in their home country,” he says.
To help ensure a smooth wealth transition, he advises those approaching retirement to consider the following:
Most people have a general idea of where they’d like to retire. If you’re unsure, consider discussing options with family or friends. If your preferred location is not your country of residence you may need to determine the best way to secure residency, whether through a visa or passport.
At this early stage of retirement planning, it’s important to develop a basic understanding of the tax environment of your desired retirement location. For example, does it adopt a worldwide tax regime (e.g. Australia), or tax on a territorial basis (e.g. Singapore, Hong Kong)?
Those planning to hold multiple residencies and live in different countries for several months each year should be aware of the tax rules in each location. For instance, holding a U.S. green card may trigger specific tax obligations.
Having more than one home in various regions can be a complex arrangement that requires technical financial and legal considerations around tax residency and filing requirements. “Wealth solutions may need to be tailor-made,” says Yam.
Nevertheless, tax is just one of many things to consider when deciding where to retire. “There are many factors that influence a retirement location, including for family or personal enjoyment. Some will still move to a particular country despite the tax costs,” he adds.
In Yam’s experience, countries such as the U.S., UK, Australia and the Netherlands are sought-after retirement destinations among both Asian families and international families – and they could have complicated tax implications . This means those looking to take up residency in one of these locales should be prepared to navigate sophisticated tax-reporting mechanisms.
For example, some high-tax jurisdictions levy estate duty and inheritance tax on property and other onshore investments. This may take some adjusting to for those who are familiar mainly with the tax-friendly environments of Asian business hubs such as Singapore and Hong Kong.
It is also important to be aware of changes to the rules that can also impact tax considerations. For example, the UK has proposed tax reforms and abolishment of the tax domicile concepts effective April 2025.
With family members based in different regions, older generations may be seeking tax-efficient ways to transfer wealth upon retirement through structures such as trusts or insurance.
Similarly, globally mobile younger generations are looking for genuine ways – such as trusts – to move family wealth offshore and minimize inheritance costs.
Thoughtful retirement planning can enable families to build wealth structures that better suit their retirement plans. Even so, changes in tax residency during retirement can affect existing wealth structures. For example, some jurisdictions tax offshore income, while others have laws that convert offshore structures into local ones, which can result in additional costs and reporting obligations.
Before you retire, discuss with an advisor whether a restructuring of wealth setups is needed. “Consider this before rushing to move and to observe any potential changes of rules and regulations that could impact your structures,” says Yam.
Lifestyle is a major factor in retirement planning. “Are you going to be a farmer? A savvy investor? And how involved do you want to be with your grandchildren?” says Yam. Your retirement goals drive your financial preparation, he notes.
Most people tend to structure their investment portfolio to fund their desired retirement lifestyle and future cost of living. But many can overlook liquidity planning and tax considerations surrounding these investments. For example, a retiree anticipating high retirement spending might pick investments – such as rental income generated from property – that offer sufficient liquid funds, which generate passive income.
But this requires evaluating which jurisdictions to invest in, as well as an understanding of the different tax obligations for each asset class, including potential tax-deductible treatments, explains Yam.
“This can be leveraged in the investment portfolio,” he says. “Start as early as possible and talk to your advisor.”
Residency in certain jurisdictions can bring with it additional liquidity considerations.
Countries with foreign-exchange controls or geopolitical developments that may result in sanctions could see wealth and investments locked in the market.
To prepare for such scenarios, Yam advises budgeting for unexpected future costs, and setting up products or structures such as life protection insurance may be considered.
While tax considerations can be crucial in a robust retirement plan, Yam has seen some individuals panic or feel pressure about their preparedness, or lack thereof.
He suggests creating a detailed, concrete retirement outline to discuss with your wealth advisor. This document will evolve when there are changes to your retirement plans and/or family circumstances, or the political landscape and tax rules shift in your desired retirement location.
“Retirement is a happy thing,” he adds. “Don’t be overly stressed. Talk to the right advisors at the right time. A good wealth planner not only helps to sort out your current issues, but also looks out for your future and monitors for potential changes.”
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