Whether you are starting out on your career or thinking about retirement in a few years time, there is no time like the present to get your finances sorted out, says Luke Staden, founder of Staden Financial Management.

Retirement planning is the most common financial goal I help expats with. That’s no surprise—after all, we all want to retire comfortably, yet most people are unprepared for it.

• Webinar: how to get ready for retirement

Right now, we are witnessing a major demographic shift: people are living longer, but birth rates are declining. This means fewer workers are supporting a growing retiree population. As a result, traditional sources of retirement income—whether government pensions or employer benefits—are becoming less generous.

Governments are raising the retirement age, and companies are scaling back pension contributions. Unfortunately, there’s little sign of this trend reversing. The responsibility of securing a comfortable retirement has now shifted to individuals. Yet, many people remain unaware of how much they need to save—until it’s too late.

How to create a retirement plan

The first step in planning for retirement is defining your goals. Ask yourself:

• When do you want to retire?
• Where do you want to retire?
• How much income will you need in today’s terms to live comfortably?

Let’s take a 40-year-old who plans to retire at 60 in the Netherlands with an annual income of €50,000 in today’s terms. Due to inflation, money loses value over time. Assuming an average 3% inflation rate, this means that in 20 years, €50,000 will need to grow to €90,000 per year to maintain the same standard of living.

The biggest risk in retirement isn’t dying too early—it’s living too long and running out of money. To prevent this, we need to design an investment strategy that provides an inflation-adjusted income without depleting your savings.

How much do you need to retire?

The Trinity Study (1998) analysed sustainable withdrawal rates from an investment portfolio. It found that withdrawing 4% per year, adjusted for inflation, had a high success rate (over 90%) for a 30-year retirement, assuming a portfolio of 50-75% stocks and 25-50% bonds. This became known as the “4% rule”, meaning you need a portfolio large enough to generate your required income at a sustainable 4% withdrawal rate.

Using this principle, to generate €90,000 per year, you’d need an investment portfolio of €2,250,000.

How much to invest to reach that goal?

The earlier you start, the easier it is. Assuming a 10% annual return on investment, here’s how much you’d need to invest per month to reach €2,250,000:

• Starting at age 30: €1,400 per month
• Starting at age 40: €3,000 per month
• Starting at age 50: €11,000 per month

Understanding Box 3 tax in the Netherlands

Taxes play a big role in how much you need to save. In the Netherlands, investment income is subject to Box 3 taxation, which can significantly impact returns. While future tax rules are uncertain, we can make reasonable estimates.

If the Dutch government implements a 30% tax on unrealised gains (taxing yearly growth even if you don’t sell), your 10% expected return would effectively drop to 7%. This would increase your required monthly investment to:

• €4,300 per month over 20 years
• €13,000 per month over 10 years

If taxation applies only to realised gains (when you sell), you might need to increase your target portfolio size to account for taxes on withdrawals. This could mean aiming for €2,925,000 instead of €2,250,000, which increases required monthly investments to:

• €3,820 per month over 20 years
• €14,150 per month over 10 years

The key takeaway: start early

The amount of money needed for a comfortable retirement is often higher than people expect. The earlier you start, the less you need to invest each month, and the more secure your future will be.

Planning for retirement as an expat in the Netherlands comes with unique challenges, from inflation to taxation. But you don’t have to figure it out alone. If you’d like a tailored plan to ensure you’re on track for the retirement you want, I’d be happy to help.

Contact Luke Staden of Staden Financial Management to set up a meeting and discuss your particular financial needs or sign up for Thursday’s online seminar.