Everything you’ll need to consider before deciding to retire abroad
With milder winters, warmer summers and the potential to get more from your pension pot, it’s not surprising that lots of people decide to retire abroad – and Spain and France remain the most popular European destinations 1.
It’s a big commitment, personally and financially, and there can be pitfalls. But with the proper planning, an overseas retirement can be everything you dreamed it would be.
If you have enough money in your pension pot, there’s nothing stopping you retiring abroad, as you can receive payments anywhere. Here’s what you need to know:
- Your private pension can be paid anywhere in the world, exactly as it would be in the UK
- Your State Pension can also be paid anywhere, so long as you inform the Department for Work and Pensions
- Your pensions will normally be paid in sterling into a UK bank
- Your income will be affected by fluctuations in the exchange rate as well as local inflation
- There may be charges for currency conversion and transferring money to a foreign bank
- You’ll get the annual pension rise – based on whichever is greater, the rise in prices, wages or 2% – in most countries. Although there are some exceptions where your pension will be frozen, notably Australia, Canada and New Zealand
Your favourite holiday spots might seem the obvious choice, but permanently setting up home is very different from a two-week summer break. For the country you’re considering, ask yourself:
- Is the local lifestyle and culture a year-round attraction?
- Do you speak the local language, or could you learn it?
- How easy is it to return to the UK if needed, or for friends and family to visit?
- What’s the public transport like, as you may choose not to drive as you get older?
An enticing reason for relocating abroad is to make the most of your pension pot. So, it’s important you research the costs of both essentials and life’s little luxuries. You may be in for a few surprises.
For instance, an average monthly food bill of £172.17 for essentials in the UK will cost you £266.79 in France, but just £164.90 in Spain 2.
How much will that cappuccino at the local café cost, or a meal at a cosy restaurant? Research the treats that matter to you.
Knowing taxi, bus and train fares is also essential if you want to make the most of your local area.
Our guide to the costs of retiring abroad will help you compare specific countries.
As you get older, healthcare is an increasingly important consideration. You’ll need to look into your rights to access healthcare in your country of choice, and what costs may be involved.
Currently most pensioners retiring abroad choose European Economic Area countries. These have a special relationship with the UK that allows our citizens access to free healthcare. Pensioners already living in these countries will continue to benefit from this agreement beyond Brexit. But for those considering a move in future, it’s still unknown if the relationship will continue, which might put your plans on hold for now.
In most other countries you will have to pay some or all the cost of treatments, which can get expensive in later life.
Buying a home in a foreign country can be more difficult than at home, and the land titles, rights, consents, regulations, taxes and charges are almost certain to be different from those in the UK.
Make sure you’re aware of how much it will cost to buy, and seek independent advice from solicitors, architects and surveyors with local experience.
Remember that not only may the cost of buying be higher, but that you might need to budget for adaptations to keep your home accessible as you get older.