You want to retire in a country with a favourable tax regime so you can get more bang for your buck. Where you retire matters, but how your assets are structured matters more than most people consider.
We commonly see internationally mobile individuals assume that choosing a low-tax destination is enough to secure a tax-efficient retirement.
However, the country you live in is only one variable. The way your international pensions, cross-border investments, and income streams are structured often has a greater influence on what you actually keep, not to mention that geopolitical events have a major effect on markets.
Research by deVere Group shows that 35% of high-net-worth individuals are actively considering relocating to another lower-tax country.
“Tax exposure is no longer treated as static. Changes to capital gains tax, inheritance frameworks and preferential regimes in several mature economies have highlighted how rapidly fiscal conditions can change. Clients are restructuring legal and residency arrangements to avoid excessive exposure to a single tax regime or political system.”
Tax-efficient retirement means structuring your savings, investments, withdrawals, and income sources to reduce the amount of tax you pay during retirement legally. The goal is to help your money last longer by keeping more of your income and investment growth.
How you take income in retirement can significantly affect taxes.
A tax-efficient withdrawal strategy may include:
For example:
Even modest tax savings can compound significantly over a long retirement.
For example:
“Retirement could now last up to 40 years”
A tax-efficient portfolio helps reduce unnecessary taxes on income, dividends, capital gains, and withdrawals. This means more of your money stays invested and working for you over time.
Even small tax savings can compound significantly over decades. Lower tax drag can help increase the overall value of your retirement savings and improve sustainability during retirement.
Reducing taxes on withdrawals may allow you to generate a higher net income from the same retirement pot, helping your savings last longer.
Using a mix of taxable, tax-deferred, and tax-efficient investments can provide flexibility in retirement. You may be able to choose where to withdraw income from each year, depending on tax rules and personal circumstances.
Tax-efficient investing can help preserve purchasing power by allowing more growth to remain invested rather than being lost to taxes.
A structured portfolio can help maximise available tax allowances, exemptions, and reliefs, potentially reducing annual tax liabilities.
Tax-efficient structures may help transfer wealth more effectively to beneficiaries and potentially reduce inheritance or estate-related taxes, depending on jurisdiction.
A well-structured portfolio can adapt from the accumulation phase into retirement income planning, helping manage taxation before and after retirement.
Efficient planning can minimise the need for reactive selling or restructuring purely for tax reasons, helping maintain a more consistent long-term investment strategy.
Tax efficiency works alongside retirement planning, investment management, estate planning, and risk management to create a more coordinated financial strategy.
Depending on the country you live in, these may include:
Pension schemes, ISAs or equivalent tax-free accounts, retirement annuities, investment bonds, dividend-focused portfolios or tax-managed funds.
Because tax rules differ between countries and can change over time, retirement planning is usually most effective when tailored to:
This covers essential living expenses such as housing, utilities, food, and healthcare.
Common sources:
These income sources are valued because they are predictable and continue regardless of market conditions.
Example:
A retiree may receive:
If essential expenses are €28,000, their basic needs are largely covered.
“Too many people are simply not saving enough, and they don’t realise just how much more they will need to retire comfortably in the future.” Nigel Green of deVere comments on a survey done on British expats, showing that most do not have enough saved for retirement.
This provides lifestyle flexibility and discretionary spending.
Typically drawn from:
This layer may fund:
Travel, dining out, hobbies, family gifts or even home upgrades.
Many retirees follow a withdrawal framework such as:
Example:
A retiree with a €1,000,000 portfolio withdrawing 4% annually could generate: €40,000 per year, combined with guaranteed income, the total retirement income could become €70,000 annually.
Most retirees keep accessible cash for short-term spending and emergencies.
Purpose:
Often includes:
Example uses:
Even in retirement, many people remain invested for long-term growth.
Why?
Retirement can last 25–35 years or longer, so inflation becomes a major risk.
Growth assets may include:
This portion helps maintain purchasing power, support later-life income needs and offset inflation.
This diversification reduces reliance on any single source.
Structuring pensions tax efficiently is an integral part of retirement and could mean the difference between living a luxurious lifestyle and counting your pennies. Always consult with an internationally qualified financial adviser with cross-border investment experience to ensure that your retirement savings are tax-efficient and optimised for the country you will retire in.
Please note, the above is for educational purposes only and does not constitute advice. You should always contact your adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.
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