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Expert Financial Advice for Expatriates

Pensions

Retiring Abroad - Part 1 - Key factors to Retiring Abroad

Jan 05th 2018


We hope you find the information in this report useful and it helps you enjoy a long and happy retirement overseas.

Today, over 1 million Britons are estimated to have their state pensions paid overseas. It is easy to see why it has become so popular – the potential to enjoy warmer climates, a healthier lifestyle and a lower cost of living has attracted many British citizens abroad.

Of course, choosing the right destination is about more than just stunning beaches, delicious cuisines and the number of sunny days in the calendar year. There are other important factors you should consider before making the decision to retire overseas.

In this short guide, we highlight the key factors you might want to think about, including:

  • Lifestyle
  • Health
  • Money
  • Pensions
  • Property

While it’s not the most exciting part of retiring overseas, you should allow plenty of time to do your research. Otherwise, you could be faced with high exchange rate costs, unnecessary tax charges and expensive healthcare fees.

While it’s not the most exciting part of retiring overseas, you should allow plenty of time to do your research. Otherwise, you could be faced with high exchange rate costs, unnecessary tax charges and expensive healthcare fees.

Lifestyle

Escaping to a place in the sun is the retirement idyll that many of us dream of. For some, it is the goal of retiring abroad which motivates the latter decades of hard work. Enjoying a well-earned, more permanent rest beside the sea of foreign shores is a fantastic way to kick-off your retirement in style.

Perhaps you already have a holiday home abroad and are looking to make it a permanent abode, or you may be making a completely spontaneous leap into the unknown. Either way, aside from packing up and physically moving home, there are a few things to consider when deciding if a permanent relocation is absolutely right for you.

First Things First…

One of the first things to consider is which countries you’re eligible to live in. There’s no point making elaborate plans for your jungle hut in the Congo if you’re sent back on a plane to Birmingham before you’ve even made it past the border! As a UK citizen, it is within your rights to live abroad in any EU or EEA member state, but there may be more strict requirements for getting a visa further afield. It’s a good idea to check the website of the country you wish to move to and see what financial requirements you might have to meet in order to emigrate permanently.

Learning the Local Lingo…

It’s important to think about the language barriers you might face as part of your move. In most expat-heavy destinations, this might not necessarily cause a problem, but if you’re looking at moving to a more remote location it could be necessary to make some preparations before you leave. The simplest activity, such as ordering a taxi, or trying to set up a phone contract, could cause some issues if it’s all conducted in pidgin English or a language you can only half understand. Taking the time to learn the language of your chosen destination well in advance could make the transition a much smoother one.

Here are some of our Top Tips to learn a language… Try different ones and use the one that works for you, or a combination - little and often is best!

  • Ten minutes every day tends to be more effective and manageable than a longer session once a week.
  • Remember mistakes are part of the learning process. Have a go and you’ll learn much more quickly: most native speakers will already appreciate you making an effort.
  • Listen to language learning CDs or podcasts during idle times, such as when travelling.
  • Watch TV and video online in the language you’re learning. You may not understand much of it but it will help you get used to how the language sounds and, with the help of the visuals, you’ll pick up odd words and phrases.
  • Write words on post-it notes and stick them around the house on everyday objects.
  • Say phone numbers out loud, make shopping and other lists or memorise orders in a bar or restaurant.
  • Repeat activities to consolidate what you’ve learnt.
  • Visit a place where you can use the language you’re learning - if anything, it will keep you motivated. This may be a French Bistro or Spanish Tapas Bar that’s local to you.
  • Find a learning partner.

Considering the Cost of Daily Living…

You may be surprised at how the cost of simple items can differ entirely to those in the UK. For example, basics such as baked beans, toiletries and familiar brands like McVities, Cadbury or Kellogg’s, which you can purchase here relatively cheaply, could come with hefty price tags abroad. It might be a good idea to check that you’ll still be able to live comfortably in the style you’re accustomed to in your chosen destination, without too much of an overhaul. Even the most adventurous of us will crave home comforts at some point!

Healthcare and other benefits…

Many people move abroad to enjoy the warmer climates, a healthier diet and a stress-free lifestyle. Indeed, there are currently much lower rates of death from heart disease in countries such as France and Spain compared to the UK.

However, before you commit to moving abroad, you might want to look carefully at the level of medical care available in your new country of residence.

In the UK, we are fortunate to enjoy free healthcare provision in the form of the NHS, but this is not always the case in other countries. Choosing to settle abroad permanently means giving up access to free healthcare, with the exception of emergencies.

In popular EU destinations, your healthcare is likely to be provided partly free, with a necessary supplement of around 30%, whereas in other countries where there are no government sponsored services, it is essential to purchase insurance on a private basis.

Many people don’t consider healthcare until they find they need assistance. But dealing with the fallout of an accident or unexpected illness in a foreign country can be a hugely daunting prospect if you aren’t prepared…

Below is a list of questions you might want to ask yourself regarding the level of healthcare available overseas:

  • What quality of healthcare can I expect to receive?
  • Which medical treatments are free and which will I need to pay for?
  • Will I need to purchase additional medical insurance?
  • Will I have to pay for any medication and how expensive is it?
  • Is there a hospital nearby my new home or will I need to travel?

Detailed information about healthcare in the country you’re moving to can be obtained from the British Embassy in that country.

Other benefits…

Aside from the State Pension, the other main benefit you might be interested in when retiring abroad is likely to be the Winter Fuel Allowance. If you are eligible, you can get up to £300 per year.

Currently, you can start or continue to claim the Winter Fuel Allowance if you live in another European Economic Area (EEA) country or Switzerland.

To receive the benefit, you must be able to demonstrate you have a ‘genuine link to the UK’. This could include receiving a UK pension, spending a significant part of your life in the UK or working in the UK and paying National Insurance.

However, retirees in seven countries (Cyprus, France, Gibraltar, Greece, Malta, Portugal and Spain) are unable to receive the benefit. These countries have a warmer climate than the UK so it has been deemed an unnecessary benefit for the UK government to provide.

Money Matters…

Becoming an expatriate is so much more than living in the sunshine, making wonderful friendships and creating great memories… Planned well, your retirement abroad can be your opportunity to get ahead in money management terms too!

As an expatriate, you may well gain a financial advantage that is of benefit to you in the form of legitimate tax savings and/or more interesting and diverse savings and investment opportunities.

We call this the expat advantage - it is all about making the most of your money when you’re living abroad and having direct access to the offshore and international financial marketplace.

Please see Retiring Abroad: Part 2 to find out how to make the most of your expat advantage.

Relocating for retirement is a huge decision, but with more and more expats choosing to retire in style abroad, where their pounds will stretch further, it’s definitely an option worth giving some serious thought.

If you are concerned about any financial aspect of retiring abroad, whether you are planning or have already made the move, our experts are on hand to help…

Request a free consultation with a financial advisor who is qualified to provide:

  • A detailed assessment of your current UK residency status, including recommendations on how you could reduce your tax burden
  • A full analysis of your tax position in your country of residence
  • Guidance on your current pension options, including any pension transfers which you may be considering
  • Options and recommendations how to tax efficiently manage UK assets, such as UK property
  • Opportunities to reduce the inheritance tax exposure on your estate

Your initial consultation is free and will help you plan and manage your retirement abroad.

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