May 29, 2024

Common Mistakes to Avoid When Planning for Retirement

Common Mistakes to Avoid When Planning for Retirement


For expats, the biggest mistake is usually not saving and investing enough to begin with.

This is a problem all around the world, but if you live in the same country all your life, there is a lot of “compulsory” saving.

That is because most people:

  • Pay taxes on the same day they are paid. This counts towards a pension in old age.
  • Take care of the mortgage on the same day (or day after) they are paid. Doing so builds up equity regardless of the negatives associated with home ownership.
  • Have at least a small private pension which comes out on pay day. There is a lot of auto enrollment schemes these days.

All of the above means that it is normal for people to retire as millionaires in some countries, even if they struggled most of their lives.

All that is required is for the house or pension to appreciate by a reasonable amount.

Now sure, some people might have to downsize the house to live a reasonable retirement, but the point is that it is doable.

In comparison, if you live overseas, you are typically outside the safety net. That has many positives, as you are often paid more and/or taxed less.

The issue is how that extra disposable money is used. Back home, most teachers can’t go on four holidays a year or have maids!

International school teachers can sometimes live like that, in some countries at least, and usually executives and high earners can live much more lavishly than that.

This saying, stated on Brainy quotes, is as true for retirement as it is for other domains:

If you can automate retirement by yourself or with the help of an advisor you are 80% there, regardless about whether you at home or overseas, via investing.

I know it sounds obvious, but various studies have shown how much and how long you save and invest is the most important variable for a comfortable retirement.

The other 20% is things like:

  • The returns
  • Tax optimization
  • Asset allocation and many other things.

Therefore, it makes no sense to delay retirement planning because you aren’t sure about taxes, or the markets or whatever.



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