Retirees who make the lifestyle choice to move to France will want to make the most of what the country has to offer, well into the future.
For many, that future may be longer than expected. French data shows that a man aged 65 can expect to live to 84.7, while a woman of the same age has an average life expectancy of 88.4 – among the highest in the EU.
Meanwhile, the UK Office for National Statistics’ Life Expectancy Calculator shows that a 65-year-old man has a 25% chance of reaching age 92 and a 2.8% chance of celebrating his 100th birthday.
A retirement stretching across several decades sounds appealing, provided we are healthy enough. However, longevity brings financial implications, both for individuals and governments. The core question is: can we afford it?
The longer we live, the longer our savings must last to maintain our standard of living.
Yet many people, including affluent households, tend to overestimate how far their retirement funds will stretch, which can leave their later years falling short of expectations.
This is why establishing and following a comprehensive wealth plan is valuable. It takes your full financial picture into account – property, savings, investments, pensions, other assets – alongside your expected annual spending. It factors in inflation, investment growth and longevity to assess how long your portfolio can sustain your lifestyle before its real value begins to erode.
Taking stock now will help you stay on track and make informed adjustments. With a well‑structured plan, you can approach the future with confidence.
Income and inflation
While inflation may no longer dominate the headlines, the cost of living will keep rising.
Even modest levels of inflation, compounded year after year, erode the real value of a fixed income and savings that fail to keep pace with it.
This is why effective financial planning will always factor it in.
For example, if you currently spend €5,000 a month, an assumed inflation rate of 3% a year means you may need around €6,720 a month in 10 years to maintain the same lifestyle, and approximately €9,030 in 20 years.
Your income and capital will need to increase in line with rising costs to preserve your long-term standard of living and ensure your savings stretch for as long as you need them to.
Contact Blevins Franks to find out more about making your money work for you in France.
Make savings and investments last
Many retirees favour low-risk, ‘safer’ investments such as bank deposits in their later years. However, with potentially 30-plus years to fund in retirement, this can be a risky strategy.
Foreigners in France also face exchange-rate risk. If you receive income in pounds, for example, while spending euros daily, currency movements may mean your money does not go as far as it once did, even without inflation.
By following core principles and taking specialist guidance, you can invest capital to give it the opportunity to keep pace with inflation while keeping risk at a comfortable level.
Establish your risk profile, then build a well‑diversified portfolio that reflects your circumstances, objectives and long‑term needs. Look for investment arrangements that offer currency flexibility, helping to limit exchange‑rate risk.
Be mindful of how much you withdraw from your portfolio each year. Taking too much in the short term, particularly during periods of weaker market returns, can undermine the long‑term sustainability of your funds and reduce your ability to meet future income requirements.
Balancing today’s spending with tomorrow’s security is a common challenge for retirees. But with a well‑structured wealth plan, supported by a sensible investment strategy and drawdown approach, this balance becomes far easier to manage.
A taxing problem
Rising life expectancy is also expensive for governments. The higher the proportion of older people in a population, the greater the costs of services such as state pensions and healthcare – and the fewer taxpayers to fund them.
The solution usually lies in pension or healthcare reforms and potentially tax increases to finance these escalating expenses.
For individuals, higher taxation can pose a threat to long-term financial security. Like inflation, it chips away at your income each year. The effect can be even more pronounced in France, with social charges applied in addition to income tax.
Personalised tax planning is essential to ensure you take full advantage of the opportunities available to improve your tax position in France.
With many of these arrangements you can combine your tax and investment planning in one exercise, allowing you to tackle the twin threats of tax and inflation at the same time.
An assurance-vie, for example, is a specialised form of life assurance that allows French residents to hold a range of investments in a highly tax-efficient package. Choose the right one, and it can also offer currency flexibility and estate planning advantages.
Get the most from your pensions
Pensions are often the key to financial security in retirement, so explore all your options and do what is right for you. Establish your income needs and objectives, and analyse the tax implications, investment options, risk levels, currency risk, and what happens to the balance when you die.
There may be ways for expatriates to make pension funds go further, be more tax-efficient, and easier to pass on, but always take regulated advice to establish the best approach for you.
Leaving wealth behind
If you want to leave a lasting legacy for your family, your wealth plan should allow for funds to last beyond your lifetime, without compromising your quality of life today.
A strategic financial planning approach that considers this alongside investment and tax will prove invaluable.
Rob Kay is a financial adviser and regional director of Blevins Franks
