Many Africans abroad spend their working years supporting family, building houses back home and paying high living costs. Retirement planning often comes last. Then, in their fifties, they realise their pension is small and their plans are unclear. Will they retire abroad, return home or split time between both?
This guide provides general information. Consider speaking with regulated financial and tax advisers in both countries.
Decide Where You Want to Retire
Your plans affect how you save. Options include:
- Retiring abroad near children and healthcare
- Returning home to family and community
- Splitting time between both countries
Your answer may change, so build flexibility into your plans.
Maximise Workplace Pensions Abroad
In many countries, employers contribute to your pension. Make sure you’re enrolled and consider contributing enough to get the full employer match where available. Employer contributions are essentially free money.
Understand State Pensions
Many countries provide state pensions based on your years of contributions. Check how many years you need, whether you can claim if you retire abroad and whether payments increase with inflation if you live overseas.
Use Tax-Advantaged Accounts
Tax-advantaged retirement accounts can boost long-term growth. Examples include pensions and ISAs in the UK, RRSPs and TFSAs in Canada, and 401(k)s and IRAs in the US. Rules on withdrawals and tax differ, especially if you move abroad later.
Nigerian Pensions
If you worked in Nigeria before relocating, you may have a Retirement Savings Account under the Contributory Pension Scheme. Keep track of it and update your details. The National Pension Commission (PenCom) regulates pensions in Nigeria and provides information on accounts and the scheme, including options that may apply to Nigerians abroad.
Think About Currency
If you’ll retire in Nigeria, you’ll spend in naira. If your pension is in pounds, dollars or euros, currency changes will affect your income. Holding assets in stronger currencies can protect purchasing power, but consider how and when you’ll convert money.
Don’t Rely Only on Property
Many diaspora Africans plan to retire on rental income from houses back home. Property can help, but rental income can be irregular, maintenance costs can rise and tenants may not pay. Combine property with pensions and other investments.
Plan for Healthcare
Healthcare costs rise with age. If retiring in Nigeria, consider health insurance and access to good hospitals. If staying abroad, understand what public healthcare covers.
Balance Retirement With Family Support
Supporting family is important, but neglecting your retirement can make you dependent later. Set aside retirement savings first, then decide how much you can give.
Tax Considerations
Pension income may be taxed in the country where you live, the country paying it, or both. Double taxation agreements may apply between some countries. Get tax advice before retiring abroad or moving back home.
Start Early and Be Consistent
The earlier you start, the more time your money has to grow. Small, regular contributions in your twenties and thirties can outperform larger contributions started later.
Review Regularly
Review your retirement plan every year or when life changes, such as a new job, marriage, children or relocation.
Keep Your Paperwork Organised
Keep a simple record of every pension and retirement account you hold, including provider names, account numbers and contact details, in a secure place your spouse or next of kin can find. Many people lose track of old workplace pensions after changing jobs or countries.
Plan for Care in Later Life
Consider who will support you if you need help in old age, and how that care will be funded in each country.
Final Thoughts
Retirement in two countries requires planning from both sides. Maximise workplace pensions, understand state pensions, use tax-advantaged accounts, track any Nigerian pension, diversify beyond property and plan for healthcare. Your future self deserves the same care you give your family today.