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• Check out, cash in?

• SARS around the world

• Emigration: Cash it in!

Question: 

I'm 51 years old and plan to emigrate once my daughter finishes university.  How does taxation on my retirement annuity work?  Am I allowed to cash in, even though I'm not yet 55?  What other considerations are there? 

Answer:

When planning to emigrate there are many considerations to factor into the plan which can make the decision complicated and intimidating.

Let’s look at some of these considerations:

1.  Make sure of your goal

The first thing you need to be sure of is that you are certain that you want to emigrate. This process can be one of the most stressful and expensive decisions to make so be very sure that where you want to go to is the right place for you.

Questions you should be asking are questions like what kind of support structure will you have in your new country? How close will this support structure actually be to you and will they be sufficient to assist us in making the change?

Financially, can you cope with the change and will this financial change mean that you will need to make lifestyle adjustments due to the changes in your financial situation? Are you ready to make these adjustments if necessary?

If you have asked yourself these questions, and a few more, and still feel that emigration is the right choice for you, then you should start the planning process.

2.  Liability matching

When deciding that you want to live in a different country and leave behind a usually long legacy in your 'old' country, the majority of us choose to leave a lingering financial foothold behind. The reason one does this is not important for this discussion but, when moving to a new country, it is a bad idea to rely on income and assets from our previous domicile to look after us in our new domicile. This principle is called liability matching.

What this essentially means is that we should earn our income, save and hold the vast majority of our assets in the currency and geography that we find ourselves living in. What this effectively does is remove from the equation factors that can have a big influence on our wealth and ability to support our lifestyles.

Factors such as currency risk and inflation can have severe consequences on our finances and are very often beyond our control. Thus we should try to avoid this kind of uncertainty by holding our investments, investing and earning our income in the currency of country we are living in.

Article continues on page two, three, four and five: the costs, getting your savings out and future tax changes...