50 Connect | Everything you need to know about retiring abroad
Everything you need to know about retiring abroad
Posted on: 23 August 2019 by Dawn Richard
It’s the dream for so many people: leaving the unpredictable weather of the UK behind and moving abroad to sunnier climes to enjoy those precious later years.
If you have plans to join them but aren’t sure you're armed with all the information you need, read on.
Where should you move to?
The all-important question, and one that boils down to personal taste. While you might have a shortlist of potential destinations, it’s vital you take into account certain factors including visa eligibility and how you plan to support yourself.
Certain countries will only look to accept retirees that already have family connections and stable finances, and you’ll also need to inform both the UK and local government that you are planning to make a permanent move.
It's well worth listing your choices in order of priority then investigating any and all potential red-tape issues, so you can make an informed decision.
Will Brexit have an impact?
The short answer is yes. Even if you aren’t looking to relocate to Europe, you’ll still be at the mercy of fluctuating currency exchange rates, meaning your savings and accessible money could be worth less than you'd hoped. This might not be a huge concern if you are willing to downsize or adjust your expectations, but that doesn’t sound like a dream retirement.
For those of you planning to move to Europe, more details of the impact of Brexit will be available after 31 October. At the very least, you should expect more stringent visa applications, harder-to-meet criteria and, potentially, more expense.
How much money will you need?
Practically speaking, you’ll need enough to buy a property (usually outright), pay for any land duties then cover all monthly outgoings. It can be difficult to accurately estimate how much this will amount to, but once you’ve chosen a destination, you can start researching the average cost of living – this calculator will help estimate the actual cost of relocating, too.
It never hurts to have more than you think you’ll need, so try to add in a contingency fund to your budget. After all, once the UK has left the EU, expats may be at the mercy of expensive medical costs, as well as premiums being added to any home comfort products that are imported in.
Will you still be able to vote in UK elections?
Leaving the UK doesn’t have to mean that you wave goodbye to all of your UK privileges, with voting a primary concern for many expats. The good news is that you will still be eligible to cast votes in any general election or referendum, but only for 15 years.
Will you need to sell your UK home?
If selling your existing home isn’t essential for your budget, there is an option to retain ownership and use the property as a source of income, by renting it out. This will also offer you a safety net should you ever need to return to the UK. Don’t forget that income tax will be a factor if you choose to pursue this route, however. You’ll be liable to pay UK tax on any money earned through rental agreements, and you might also be liable for local tax where you live.
Will your pension be affected?
There are two aspects to this. On one hand, if you are eligible to receive a state pension, having paid the requisite amount of National Insurance contributions throughout your working life, you will be able to collect it regardless of whether you live in the UK or not. UK state pensions can be paid into either domestic or foreign bank accounts with no problem.
If you choose to take financial advice and transfer a private pension, you could be leaving yourself open to potential losses. It can be a lucrative opportunity for ruthless advisers to suggest transferring a pension fund into an overseas equivalent, but many have fallen prey to reduced savings. That’s not to say that there isn’t a real possibility of growing your money, but a lot of research needs to be carried out and only recognised financial advisers should be trusted. Never accept an unsolicited offer from an adviser that contacts you out of the blue.
There’s a lot to consider before retiring abroad, but by taking a methodical approach and prioritising financial transparency, you can be ready to take the plunge quicker than you might think. The only complication that might be beyond your control is the Brexit aftermath, but there’s no planning for what hasn’t happened yet.