Retiring abroad tops many UK workers’ wish lists with only 43% of Brits considering the UK as their retirement location. The financial aspects of retiring abroad are a consideration but making the most of retiring abroad is not just about the finances.
Why Brits Want to Retire Abroad
The British weather is one of the top reasons why Brits want to head to sunnier climates when retirement arrives. According to a recent survey by Aon Consulting 87% of Spanish workers and 81% of French workers intend to retire in their home country. Around 57% of British workers want to head off abroad as soon as they finish work for good. One in four Brits claim that Spain would be their first retirement choice with America and Australasia coming in second and third respectively. The climate and the higher standards and lower costs of living are all reasons why Brits want to retire abroad.
Financial Considerations when Retiring Abroad
Preparation is the key to getting the most out of retiring abroad. Many retirees choose countries that have low costs of living, which does make sense when it comes to financial expenses such as accommodation and living expenses. But issues such as healthcare and tax can eliminate any savings made by the low cost of living. These issues will be a factor depending on the country chosen as the retirement home. Double taxation may be an issue depending on whether retirees intend to stay part time in their retirement country or become permanent residents.
Factors to Consider When Retiring Abroad
An amount of preparation should be taken to ensure that the intended retirement country is the right choice. Questions to research should include:
- Will state pensions paid abroad increase in line with inflation?
- Is there a double taxation agreement in place with the retirement country and the UK?
- Does the retirement country have wealth taxes where taxation applies to worldwide assets?
- Will lump sums from pensions be taxed if taken in the retirement country?
- Can certain benefits such as the winter fuel allowance and incapacity benefits be affected by the retirement destination?
- Always consider the strength or weakness of the local currency if income is in sterling
- Research inheritance tax rules; in France the inheritance beneficiaries are liable for inheritance tax
- Will the retirement country provide access to healthcare through the European Health Insurance Card?
Take an Extended Holiday before Retiring Abroad
Financial considerations when retiring abroad are important but are not the only issue. Summer holidays abroad for a few of weeks are different from moving to a country permanently. Anyone considering retiring abroad should take extended holidays during the off peak holiday season. Taking an off peak extended holiday will be inexpensive and will also give a true representation of the country outside of the popular holiday periods. Many popular retirement countries such as Spain and Italy can be quieter and colder during early spring, late autumn and the winter seasons.
Make the Most of Expat Internet Communities
Most countries abroad have expats who are working or retired. Expats are the best people to provide the truth about living and retiring in certain countries. Expat forums on the internet can provide a great deal of useful information on a wide range or retirement abroad issues. Information on issues such as pensions, accommodation, taxation, healthcare and even the best restaurants can all be found on expat forums. This is also a great place to meet new friends in the intended retirement country.
Relevant Issues When Retiring Abroad
There are some relevant issues that many people do not consider when retiring abroad. Language and cultural differences should be considered when retiring abroad. Easy accessibility to the UK may also be a consideration especially if friends and family wish to visit or retirees wish to visit the UK. If hot weather is one of the major retirement factors then research the winter months in the retirement destination. Research the health facilities in the retirement destination; are they comparable to healthcare in the UK?
Retiring abroad is not for everyone and many UK retirees do find themselves starting all over again in the UK after a year or two abroad. But retiring abroad can have many advantages when compared to retirement years spent in the UK. Comprehensive research of the intended retirement country should help retirees make the right retirement country choice.
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