It’s never too early to start planning for your retirement years. One of the points to ponder is where you will spend those years. If the idea of living offshore is appealing, a key resource that you want to consult is the Annual Global Retirement Index.
Here are some of the basics about this Index, how you can use it, and why it could be one of the most helpful tools for structuring your retirement planning.
What’s the Purpose of an Annual Global Retirement Index?
The stated purpose of the International Living Annual Global Retirement Index is to help people be aware of options for living comfortably in different places around the world. Based on the information used to create the Index, it’s possible to get a good idea of the average cost of living in various countries. While helpful for anyone, it’s especially helpful for those hoping to enjoy a higher quality of life while getting by with a leaner income.
Perhaps you will retire and rely primarily on Social Security and a small pension from your last employer. Remaining in your current location is doable, but it would also mean having less disposable income after taking care of your basic living needs.
It’s possible that relocating offshore would allow you to pay less for basic expenses and free up more resources for travel and other things that you want to do. Using the Index makes it easier to identify countries where this is possible.
What Factors Determine the Ranking in This Type of Index?
Several factors are taken into consideration when compiling the Index each year. Some of the top ones include:
The Index looks at the average cost of housing, both from the perspective of owning and renting. Utility costs are also considered closely. The cost of food, including dining out, is also one of the main ranking factors.
Other ranking factors include:
- Healthcare availability and cost
- Infrastructure like roadways, public services, and Internet access are also factored into the ranking.
- Any financial offers or other incentives a country might provide for expats to settle there
Are Banking Laws and Procedures Considered?
Along with political stability, the structure of current banking laws receives some attention. The goal is to identify how those laws impact the rates of interest that the banks in those nations offer. This is true for savings and similar bank accounts and the interest rates charged on real estate loans, including residential mortgages.
This is important for you since the plan may include the eventual purchase of property to spend your retirement years. It is essential to understand if it’s possible to purchase something now as a non-citizen and arrange the upkeep until you make the move.
It’s also helpful to know if the banking laws make it possible to utilize a real estate arm to rent out the property until you retire. Depending on the nation you select, it may be possible to buy now, rent, or lease the property for several years and then take it off the rental market in the months leading up to your retirement.
Is There More Than One Index Available?
There’s no doubt that the International Living Annual Global Retirement Index is one of the most popular and accurate today. Now entering into the fourth decade of existence, it’s adapted to a changing world and offers information that many people can put to good use.
Other resources accomplish much of the same. Natixis Investment Managers offers what’s known as a Global Retirement Index that covers much of the same criteria as found with the International Living effort. A few other factors are included as well, including:
- Current impact of the air quality
- General security
Those making retirement plans may want to utilize this and other supplemental resources to determine the best locations for living as expats.
How Often are These Resources Updated?
International Living updates its Index annually. Data related to the previous year is considered, and economic, political, and other activity projections for the coming year. The goal is to maintain a well-rounded resource that accounts for as many factors as possible.
Many other resources also update on an annual basis. When consulting them, consider that recommendations for 2021 may be somewhat impacted by the pandemic conditions of 2020 and how certain nations are faring as 2021 progresses.
In some cases, this means that data from 2019 may still be factored into the results or that projections related to emerging conditions in 2021 may take on greater significance.
Using the Index as Part of Your Financial Planning
How can you utilize the Index as part of your financial planning? For those who have decades until retirement, it’s possible to draw on the historical data found in previous years and compare it with the current annual period.
Your goal is to get an idea of which nations tend to maintain relatively stable rankings from year to year, even if they may move up or down a couple of slots as time passes.
Those retiring in the next several years can draw on the current and historical data provided within the Index. Here, the focus is more on how the rankings may have shifted over the last five years or so.
If there are nations that provide the setting where you want to live, offer a cost of living that fits well within your means, and give all or most of the amenities that you hope to enjoy, the Index effectively provides a list of which nations to investigate in greater detail.
Your Selection of an Offshore Bank
While you may not be thinking a lot about where to do your banking, the fact is that it will be easier to make use of an offshore bank that’s located in a country where you hope to retire. As you narrow the range of choices based on what it would cost to live there, it’s easier to spend time comparing banks that operate within that nation. You also learn more about the banking laws and how they would relate to you as an expat.
For example, you may determine that Belize would be ideal with its lower cost of living, beautiful beaches, and no language barrier for English-speaking expats. At that point, you can begin to consider setting up time deposit accounts to build wealth for your retirement years.
You can also establish checking accounts and possibly other accounts that allow you to live and function with greater ease in your eventual new home. That may even include purchasing a residence rather than renting one.
Even if it’s just a matter of years before you plan to leave the workforce, starting to build wealth or acquire property in the right offshore location can make a difference. The team at Caye International Bank stands ready to help you with your offshore financial needs.
Contact us today and learn more about what we can do to help set up offshore accounts that provide more security during your retirement years.