You are here: Home - Retirement - Retirement planning - News -

Six tips if you’re thinking of retiring abroad

Written by: Jamie Jenkins
If your summer holiday has inspired you to think about retiring abroad, here are six top tips to consider making a move from home.

1) Your property – try before you buy

People often sell their homes to follow their dreams, but it may make sense to consider holding off until you’re 100% sure you’re move abroad is the right decision. You could consider renting overseas first, to make sure you’ve got it right. That enables you to find your feet, work out exactly where you want to live and understand more about the actual cost of living abroad. You can find out more about how the cost of living compares between countries here. Meantime, you could consider renting out your UK home, rather than losing your foothold in the UK property market if there is a chance you might move back. Remember that you also need to think about the impact of rental income on your income tax bill.

2) Healthcare

For many people one of the main concerns about moving abroad is healthcare. The way it operates varies from country to country. So do your research and find out as much as you can about how it operates where you are going and look at private insurance options too. The NHS provides country guides to help you find out more.

3) State pension – how to claim

Your state pension will continue to be paid if you retire abroad and you can claim your state pension if you are within four months of state pension age, by contacting the International Pension Centre. If you’re planning to live abroad only part of the time, then you will need to decide if you would like your pension paid to your home in the UK, or your new overseas home, for the full year. So think about what is going to be easiest and most convenient for you, bearing in mind the potential for currency fluctuations too.

4) Keeping pace with cost of living

Did you know that whether you will benefit from any annual increases in the state pension once you move abroad depends on which country you retire to? Currently, if you retire to a country which is in the European Economic Area, Switzerland or Gibraltar, you will receive any annual increases made to the state pension. The same applies if you retire to a country that has a social security agreement with the UK, like the US, for example.

However, you won’t receive these increases if you retire to other countries where there is no social security agreement in place. This includes some popular destinations such as Australia. There are also two notable exceptions to the social security agreement rule, so if you retire to New Zealand or Canada, even though there is an agreement in place, you won’t receive any increases in your state pension.

You can check out the situation for the country you want to retire to on the government website.
It’s important to know if you will be left out in the cold when it comes to these increases, as you could see the value of your state pension quickly being eroded in real terms.

5) Private or workplace pensions here

Investing in a private or workplace pension will mean you have more than the state pension to live on when you retire abroad. You may even consider moving your pension abroad to eliminate any future currency fluctuations. But it’s worth bearing in mind that recent changes brought in by HMRC mean that transferring your private pension to an overseas pension scheme may incur a 25% tax charge. If this is the case, the best option may be to keep your private pension in the UK and take the income from it as normal.

6) Income – don’t let it get too taxing

You’ll still be subject to income tax on your state pension even if you move abroad. In some cases you will also be subject to tax in the country you have moved to, but many countries have what is called a ‘double taxation agreement’ which means you won’t be taxed twice. Again, depends on where you move to and what agreements that country has in place with the UK.

So don’t forget to check this out and keep it in mind when deciding your retirement destination. Planning your tax and finance can get complicated when you’re moving overseas, or spending time flitting between different countries. So you should consider seeking expert financial advice to help you get it right.

Jamie Jenkins is a personal finance expert at Standard Life

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Why that buy-now-pay-later deal could cost more than you think

Credit options, particularly on larger purchases, can be an attractive method of payment for consumers. But buy-now-pay-later deals can cost...