Financial Planning, Pensions Advice, Financial Adviser Dunfermline, Fife, Edinburgh and Central Scotland

Tuesday 16th October 2018

Brits who are heading abroad for their retirement have revealed the hotspots that are tempting them; of course, there’s more to think about than just the destination of your new home.

For some approaching retirement, leaving the UK behind for different climes is a dream. Whether it’s the weather, culture or the desire for a change of scenery that’s driving your retirement plans abroad, there’s a lot to think about; starting with the destination.

New research from Retirement Advantage has revealed the hotspots that are tempting British retirees and the motivations behind the life-changing move. Perhaps unsurprisingly given its enviable weather, accessibility from the UK and expat population, Spain was crowned the number one place to settle in retirement. It’s a position Spain has consistently held since 2013 but the survey discovered there are many other countries Brits are opting to head to across Europe and further afield.

The Nation’s nine favourite retirement destinations for 2018 are:

  1. Spain
  2. France
  3. Portugal
  4. Italy
  5. South East Europe
  6. America
  7. New Zealand
  8. Far East
  9. Australia

There are, of course, many reasons to consider enjoying your retirement years outside of the UK. The research found that among the top reasons for considering retiring abroad this year were the prospect of a better lifestyle, a cheaper cost of living and better weather than in the UK. With money and lifestyle key driving factors for many retirees, it’s crucial to accurately assess retirement income and outgoings before making a decision.

You may have calculated that your pension in the UK is enough to provide you with the lifestyle you want; but will this be the same if you were living abroad? To accurately assess your finances before you move abroad there are many things to weigh up, here are five key areas you should consider:

1. Pension income

For most retirees considering moving abroad, there are two types of pension to consider; the UK State Pension and a Workplace Pension or Personal Pension.

Firstly, if you’re eligible for the full UK State Pension, this can be accessed in any country in the world. However, it may be frozen at a certain rate. The State Pension is linked to the cost of living in the UK, but if you’re living abroad you’ll only benefit from these increases if your new home has a reciprocal social security agreement with the UK. So, if you’ve been planning to move to Australia or New Zealand, for example, your pension won’t increase, even if the cost of living does.

If you have a Personal Pension or Workplace Pension, you’ll need to check your personal agreement before moving abroad to understand any restrictions that may be in place.

2. Tax liability

Tax laws vary from country to country, and, in some cases, you may still need to pay UK tax too. It’s essential to get professional advice on what your tax liability would be if you moved to another country, allowing you to understand your income and outgoings. If you’re unsure of whether you will need to pay tax in the UK, HM Revenue and Customers (HMRC) can help.

3. Exchange rates

You’ll also need to account for exchange rates fluctuating. You might receive the same monthly income from your pension, but currency rates may mean the amount you have to spend can be volatile. It’ll also affect the value of other cash you may have, such as those sitting in a savings account. It may work out more effective to withdraw and exchange lump sums rather than taking set amounts at monthly intervals depending on the foreign exchange market and your plans.

4. Cost of living

While the cost of living may be cheaper in some of the top retirement destinations for UK expats, it is still something you should spend some time looking over and delving into specific areas. You may, for example, find that your utility bills are reduced but that your grocery shopping will increase. Taking a look through your current budget and where the bulk of your expenditure goes while in the UK can help you convert this into a cost of living in the new destination with your lifestyle in mind.

5. Healthcare

You’ll want to check the cost of healthcare in the country you’re considering moving to, taking into account any existing medical conditions and potential issues in the future. It’s likely that the healthcare system available in the country you want to retire to will be very different to that offered in the UK, and you may need to pay the full cost of treatments should you need them. If this is the case, healthcare insurance may prove to be a wise decision.

The UK does have healthcare arrangements with some countries, but these can vary significantly. A country-by-country guide is provided by the NHS.

If you’re considering retiring abroad, there’s a lot to think about alongside the excitement of researching the local area that’s captured your attention. Whether you plan to make the move in the next 12 months or are planning a decade in advance, speaking to us can help create a financial plan that will make the most of your assets and income, allowing you to fully enjoy settling into your new home.