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Managing your retirement

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PHUKET: When planning for retirement, once a plan is in place, the next step is actually to manage it. While it’s not a full-time job, there are certain things that need to be regularly taken care of in order to ensure one’s retirement runs smoothly.

First, the age-old question of whether to rent or buy needs to be addressed. Many clients and fellow expats contemplate what to do in terms of housing. The first consideration is whether or not they still own a home back in their native country. Some will have decided to rent out their homes and use the rental income as part of their retirement earnings.

Others are unable to part with their homes because of sentimental value, or they still stay in it when visiting home. However, if there is a mortgage on the property, it’s best to sell it. There’s no room for a

mortgage or debt in managing your retirement. Debt is a sure way to manage your retirement into the ground.

Here in Phuket, renting is recommended. For one, renting gives retirees the ability to determine if a unit or building is right for them. There are many horror stories of bars opening and the noise making for many unpleasant nights. Second, there are few, if any, management companies that care for properties like those in the US.

Renting provides the option of walking away from just a security deposit and one month’s rent if it’s a one-year contract. Search for rental property in the low season, as deals will be plentiful and there will be a broad selection of units and buildings.

If a house is desired, renting is the way to go because foreigners cannot technically own land. There are many unscrupulous agents who will say that setting up a Thai company is the way to go. Tell that to the expat whose lawyer kept the 51% when he was supposed to just be the nominee. Retirees cannot afford to put themselves in a bad situation.

If the decision to buy is made, be sure to consult with a reputable law firm that has experience working with foreigners and contracts, and take steps to ensure that if the investment goes wrong, it won’t derail retirement plans. Always have a contingency plan.

The second thing to address when managing one’s retirement is life insurance. Life insurance is actually something probably not needed once retired. The only reason to keep a current life insurance policy is if large debts are held. Most retirees are better off cashing in their life insurance policy and investing it elsewhere.

Third, retirees should ensure their affairs are in order. All accounts should have designated beneficiaries – this goes along with a will and ensures who gets what. All important documents should be easily accessible by family. This should include a will, trust documents, insurance policies, a detailed listing of assets – including account numbers and dollar amounts, and a durable power of attorney.

The fourth and final part of managing retirement is managing a portfolio. The two critical pieces to managing a portfolio are yearly portfolio adjustments and actually building on a portfolio. Even though retired, with the right Exchange-Traded Funds (ETFs) and stocks, retirees can actually grow their retirement portfolio with adequate planning.

Many retirees have been misguided and misinformed that stocks are too risky for them and bonds are the best investment, because they produce income. The reality is that a balanced and diversified portfolio is what’s important.

“Managing a portfolio also involves managing withdrawals and then re-balancing the portfolio after the withdrawals are made. A common question from clients is which account should they take their money from? That’s why each retirement portfolio is unique and why a custom plan is necessary.

Don Freeman is president of Freeman Capital Management, an independent US Registered Investment Advisor. He has over 15 years experience and provides personal financial planning and wealth management to expatriates. Specializing in UK and US pension transfers. Call 089-970 5795 or email: freemancapital@gmail.com.

— Don Freeman

 

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