Before we concentrate on overcoming this issue, we must understand why it occurs. Believe me, you will see this happening in every mundane corner of life, procrastination, diet, exercise and financially. Over 25% of people claim they do not have savings and the most common reason for not building savings for the future is that it can feel like a loss right now. This cognitive effect has detrimental impacts on retirement funds. People have not saved enough for retirement and subsequently compromise their standard of living upon retirement.

Another consequence of the present bias is rushing into investments. Crypto currency is easily accessible; gratifying the urge to invest in one simple click of a button – this often is not a thought-out plan! Subsequently the present bias will be at play when we see the markets drop. An overwhelming urge to vacate the bad situation and associated feelings. Sell and run (sadly locking in the loss!). The present bias is an emotionally driven, cognitive influence that can easily steer us into bad decisions.

So…you have read this far. Now the question should be resonating, how do I control this?

Its relatively simple, it all boils down to a plan. The reason why you are doing something must outweigh the urge for instant gratification. It could be putting the snack aside so as not to spoil your dinner, a smaller rental to build a deposit for the dream home or simply a little here and there to secure your financial independence. Whatever the motivation, it all boils down to the plan and remembering the true reason ‘why’.

Pay bills, make dentist appointment, take cat to vet, help kids with homework, cook dinner, do washing, sort out finances……the list of daily tasks for any parent can be never-ending so add the pressure of work into the mix and it’s not surprising that sorting out those finances is all too often at the bottom of the list, waiting for a day when you’ll have more time.

But……will you ever have more time and when you do will it be a bit too late – a bit late to plan for your children’s education, a bit late to plan for meeting your aspirations in retirement? In reality there’s always something you can do but the earlier you think about putting a plan in place the more options will be available to you.

If you speak to a financial adviser, they’ll take you through the essentials of financial planning for people living and/or working in Switzerland. Your adviser will consider your personal circumstances – family situation, employment history and future plans before providing recommendations to suit your individual needs.

Parents have many of the same questions as everyone else but there are obviously areas of particular interest such as saving for children’s education, how to make the most of tax advantages related to childcare and how to deal with inheritance issues. Key questions parents often ask include:

• How much should I be saving for my children’s higher education?
• Will I have saved enough for when I reach retirement?
• How can I maximize the tax advantages available to me in Switzerland?
• Should I consolidate the pension plans I’ve accumulated abroad?
• How can I pass wealth on to my children in a tax-efficient manner?

Depending on your individual situation the adviser will answer your questions and propose savings and investment solutions to suit your requirements. What action you decide to take based on this advice is up to you but whatever happens it’s one more thing you can cross off your list!

As you age, one thing you are probably thinking about more and more is retirement. Whether you’re on the cusp of this life milestone or just realizing that you have more than a decade or so left to save, you should take some time to consider your retirement prospects seriously.

How much have you managed to save so far?………How do you know how much is enough?………..How much have other people your age saved?

The truth is when it comes to savings most people are falling short. Nearly 60% of adults have less than 5,000 in their savings accounts, with retirement funds looking equally bleak. This harsh reality stems from the younger generation and their inability to save. We’ve all heard the saying, “I’ll save more when I’m making more”. But whether you’re making 50,000 a year or 200,000 a year, we all have challenges saving money. Generally, what happens is when people make more, they end up spending more. A bigger house, a nicer car, more holidays, the list can be endless.

The sooner you start saving for retirement or any other major purchases in life the better. After all, time is on your side when you’re young, and thanks to the power of compound interest a small amount put aside each month early on can make a big difference later in life. While the amount you need in savings is highly personal, and specific amounts arbitrary, a simple formula can help you figure out if you’re setting aside enough money.

In your 20s: Aim to save 25% of your overall gross pay. That 25% is the combination of pension withholdings, matching funds from your employer and any cash savings that you have. The trick is to make sure your lifestyle expenses don’t exceed 75% of your gross income.

By age 30: Have the equivalent of your annual salary saved for example. If you earn 100,000 a year, aim to have 100,000 in savings when you hit 30. Again, this includes any retirement account contributions, matching funds from your company, cash savings, or money you have invested elsewhere in index funds or other assets.

By age 40: Have three times your annual salary saved.

By age 50: Have five times your annual salary saved.

By age 60: Have seven times your annual salary saved.

The ideal amount is to have at least 10 times your annual salary by the time you retire, which for most of us will be around 65- 67 years old. While this can sound super daunting today, if you’re putting that money to work starting in your 20s, it’s not as difficult as it sounds.

Of course, these are the ideal numbers, and experience will teach you that things don’t always work out as we plan, life is anything but linear. More than likely you’ll have to adjust, by saving more in some years and less in others, depending on major life events, such as having a child or buying a home.
Employing the services of a financial advisor early on can however ease the burden. They can give you an accurate view of where you are relative to your current lifestyle and the standard of living you hope to have in retirement. Utilizing current technology, they can show you different possible retirement outcomes and how to prepare for both the good and the bad.

They will help you develop a clear understanding of how much money you’ll need to retire based on your own personal requirements as well as establish solutions to help you achieve that taking into account your risk profile. Knowing if you must put your nose to the grindstone and save more money is vital when you’re getting closer to your final working days.

Unfortunately, the consensus thinks that if you don’t have much saved, you don’t have enough to work with an advisor. The truth is you can’t afford to not work with an advisor. The closer you get to retirement the greater the need for capital preservation, as the time to recover from a financial mishap is greatly reduced.

Partnering with an experienced professional will allow you to consistently build wealth whilst managing all the associated risks and challenges along the journey of life. When it comes to finally hanging up those working boots, you’ll be well prepared and ready to put your feet up and enjoy the sunshine

The dream is becoming a reality. But taking the time to plan is important.

There are additional costs to consider. Moving expenses, time off to prepare, storage facilities, rental contracts, mortgages, household bills, tax bills, extra winter clothes (The weather in Zurich is somewhat different than Lisbon during winter).

Bills and expenses don’t stop when you move to a new country. In most cases they’ll increase before your move. Make sure you’re saving some cash each month before you move to cover these additional costs. If you need to take on debt, take a low-cost loan or use interest free periods on credit cards in your home country – you don’t want to take on debt as soon as you land. We would all like to believe we will be successful, and everything will work out, but always have a plan B and short-term savings will help you achieve this.

2. Just Arrived

You may find that whist acclimatizing you eat into your savings – generating a social circle will be important to help you feel comfortable in your new surroundings. Social spending may increase in the short term and there are a few key areas that you need to be address.

Understand your new tax environment. Low taxes are great, but what help will I get from the state? What if I’m ill? What if I can’t work? What happens when I die? What will happen to my family?

It is more than likely that without addressing these issues you run the risk of financial ruin. Policies that you previously had in place may now be invalid. For example, most Life Insurances taken out in the UK will not cover you for prolonged periods abroad. Health insurance is a big one. Switzerland has a relatively complex Healthcare system, for any newcomer. A review of what you have and what you need immediately is essential. Don’t let your loved ones suffer, make the future safe and protect what you can and what’s most important to you.

Understand what you are entitled to from your old tax environment. Not sure if you’ll be staying long? You have a 3 to 5-year plan and you’re going to return home? Want to spend more than 3 months back ‘home’ each year?

Generally speaking, if you call the UK ‘home’ and you spend more than 90 days there you could be deemed a resident and therefore taxed as such. In many cases, the time frame could be shorter depending on how many ties you have with the UK. Understanding your position is key to avoiding expensive mistakes. If you are deemed a UK tax resident your income could be liable to UK tax.

As an expat, you can also still contribute to the UK tax system through National Insurance contributions and benefit from accruing things like the State Pension. You can also contribute into a UK pension scheme up to £3,600 gross per year. Many pension schemes will give you basic rate tax relief at source and therefore it will only cost you £2,880 each year. There is a time limit on this ability and you can only do this for 5 years after you’ve left the UK.

Knowing what you don’t know, is a skill we ignore all too often. Speak to those that do.

3. One Year In…

You’ve survived the first year! By now you should have a good idea about what’s coming in and what’s going out every month. If you don’t you should do. Budgeting is key to understanding where your money is going and how much extra you have at the end of the month. Expats enjoy a healthy salary and have the opportunity to secure their financail future. Don’t waste it.

Make the most of what you have where you live. In Switzerland you have access to very tax efficient savings vehicles. Planning early enables you to take advantage of tax savings earlier, and you’ll benefit from compound growth, the eighth wonder of the world! You don’t need to save a lot each month if you start early enough.

Start to set goals for what you want to achieve. The kids’ future, your retirement. We’re more likely to get to where we want to go if we have a map. Split the goals into short term, midterm and long-term goals. Remember to stay liquid and have enough cash for an emergency.

Where are you going to invest? Think about your currency exposure. This will be a new risk to consider if this is your first time working abroad. Reduce the risks you can. And save in a currency that you will likely spend in the future. This might be spread across different currencies in different jurisdictions.

4. Three Years In…

By now you’ll have your routine set. You know all the good places in town and the career is going from strength to strength. You may have more disposable income and re-budgeting and keeping on track is key to realising those goals you set yourself. All too often wage increases coincide with lifestyle changes and we tend to forget the longer term objectives.

New life events are a common theme for seasoned international workers, whether this be a new child, children starting school, marriage, family death, divorce… life goes on and your ability to withstand and build after these events will largely depend on the planning you have made previously. Reviews and readjustments are a part of life and yours goals may alter. You might be starting to think about that magic number? What is yours? What do you need to leave, to start a new life somewhere?

You might be thinking about disposing or selling assets down in your home country. In the UK for example, after three full tax years, certain assets can be sold capital gains tax free in the UK for non-residents. That stock holding from a previous employment, your investment account with the bank – now is the time to consider your options.

What about that UK Pension? How’s that getting on? Do you know what you’ll get from it? What if you die before taking it? When looking at your assets based in different countries, don’t forget about your pension. It can be one of the most valuable assets that you own and if you don’t look after it, it may not be able to look after you!

5. Ten Years In…

A seasoned veteran expat. Your advice to new comers is essential and you will have learnt from your experiences. But how long are you planning on staying? What’s the exit plan? Have you saved enough, or do you need to do more?

By now you need to know what income level you need in retirement and how far you are away. Funding any shortfall whilst you can will be invaluable for your financial future.

You might be in a position where you’ve built up assets in a rather random fashion and need to reorganise what you have. Making use of the right tax wrappers and ensuring you put these in place well before you leave will only benefit you financially in the future. For example, international investment bonds offer savers time apportionment relief from tax – i.e. the longer you’ve held the policy internationally, the lower the tax burden will be if you return to the UK. Even if you top the policy up at a later date, the date of the relief is given from the day you took out the policy. Couple this with other tax advantages, such as tax deferred withdrawals and optimising the use of international trusts and you might just have saved thousands, if not hundreds of thousands in tax.

6. Leaving and Heading Home

Your time has come but it’s not too late to make some small changes that will have a big impact. Whether you’re leaving to enter retirement, you’re home sick or just finished one step in your career to take another, there are certain things you can do.

Depending on where you are heading next, make sure the assets you hold are in the most tax efficient vehicles. Forgot about any stock holdings with large capital gains? Think about crystallising those gains and rebasing the assets. Use the right tax wrappers to protect your capital from any taxes on growth or income. Think about how your investments are structured, do you need an income from them? How much do you need? Much the same as when you first arrived, there are factors to consider around increased short-term costs and any debts should be paid off before you get on that plane.