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10 need-to-knows if you’re considering retiring abroad

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Written by: YourMoney.com
13/09/2022
The cost-of-living crunch is spurring more people to consider retiring abroad. But before you make the move, here are 10 tips to help.

Thoughts of a better lifestyle and weather amid the current cost-of-living crisis means Brits over the age of 50 who are yet to retire are looking to spend their golden years overseas.

Over the past decade, Spain has taken the top spot for the most popular overseas retirement destination (46%), followed by Portugal (21%) and France (19%).

According to Canada Life, 51% thinking about retiring abroad are more likely to actually make the move in the future because of surging prices at home.

They thought moving abroad would mean a cheaper standard of living, with an average monthly income needed of around £1,430, compared to the monthly household income of £1,931 needed to remain in the UK.

Brexit blues

But Brexit has dampened Brits’ enthusiasm to move overseas, with 53% reconsidering where they might retire to, while 48% said the departure from the EU is making them reconsider their plans altogether.

Andrew Tully, technical director at Canada Life, warned that retiring abroad “is not a step to be taken lightly though”.

Tully said: “The financial considerations are vast, such as thinking about the impact of currency exchange rates, local tax rules, and whether State Pensions will keep pace with the cost of living.

“The choice of country is important as when money is withdrawn the taxation rules of the country in which people reside will apply.

“To help navigate the complexities around retiring abroad, it’s important to seek expert advice from someone who specialises in expatriate finance.”

10 top tips for retiring abroad

1) Get an estimate of your state pension.

2) Seek independent financial advice before you move – you can look for an adviser via Unbiased by searching for specialists relating to expatriate finance.

3) Tell HM Revenue and Customs that you are moving overseas. This allows it to let you know of any UK tax liability you may have even though you are planning to live overseas. And more importantly, it can allow any UK pension you have to be paid gross (no tax deducted) and taxed in your country of residence. However, this only applies if the country you live in has a double taxation agreement with the UK.

4) Check what reciprocal social security agreements are in place with the destination country regarding your UK State Pension. Countries in the EU – as well as many others – have these agreements with the UK, which means the State Pension will increase each year in the same way as retirees living in the UK. It’s also important to understand whether the agreements are in place outside of the EU. Currently, of the State Pensions which are paid overseas, 43% are frozen.

5) Find out about your welfare rights while abroad, such as bereavement allowance, child benefit and carers’ allowance, and check the cost of healthcare in the country to which you are thinking of moving. You should consider some form of medical insurance.

6) Keep an eye on exchange rates as state pension and other income is likely to be paid to you in pounds and you will then need to convert to the local currency which may mean your income fluctuates. It is also important to research overseas fund transfer firms, particularly around the cost of sending money. Some comparison sites, such as Moneysupermarket can help you.

7) If you decide to keep your property in the UK you will need to let your mortgage provider and insurance company know if it will be rented or remain empty. Most standard insurance policies have a limitation on how long you can leave a property unoccupied, such as one month or three months. Using a specialist broker can give access to insurance which would cover longer absences.

If you plan to rent your property, consider appointing a qualified letting agent to manage the property while you are overseas. You also need to remember to declare any income in the UK although some people may be able to register with the Non-resident Landlord Scheme to receive the gross rent.

8) Notify utility companies, financial institutions and your local council when you are leaving.

9) Contact the electoral register, and arrange for mail forwarding via the Post Office.

10) If you plan to keep an account at your UK bank, contact it and ask if you will face any new rules or restrictions after moving abroad.

Some UK banks and building societies informed customers living in countries within the EU that following the end of the Brexit transition period, they may no longer be able to hold their account.

As an example, NS&I – the government’s savings arm – contacted around 164,000 customers resident in all EU countries this summer letting them know that, should their UK bank or building society account be closed, “it may not be practical for them to continue to hold NS&I products”.

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