If your plans for your golden years include golf in the sunshine, fine dining, or immersing yourself in another historic culture, then life abroad as a UK pensioner beckons.
But before you make your move, there are five important factors to consider if you want to make sure that your pension pot continues to provide the lifestyle you worked hard for.
Family ties, language skills, and personal interests will all heavily influence which country you decide to retire to, but if the sole purpose is to unlock a better standard of living in retirement, thorough research will pay dividends.
Choosing your location wisely
The cost of living typically lower than the UK (Portugal, Greece, Spain) or potentially higher (USA, Australia)?
How will you cover healthcare? It’s likely to be more of a factor as you advance in years, and you’ll be leaving free NHS coverage behind. Check whether your country of choice applies a social security-backed system with a reciprocal UK agreement, or whether you’ll need to take out private medical insurance.
Finally, there’s the question of where to keep your current savings and investments. Compare the capital gains and inheritance tax thresholds in the UK with your overseas destination to establish whether you should keep everything in the UK, move it all overseas, or transfer a portion at a time as required.
The cost of buying property
If you’re able to sell your UK home and purchase a property overseas outright, you’ll have fewer hurdles to hop over and the chance to significantly enhance your lifestyle if you pick wisely. You might also be able to take advantage of investment visa schemes in some countries to make obtaining residency easier.
If you’re applying for an overseas mortgage, however, there could be maximum age limits and shorter-term contracts that you’ll need to consider. You might also be required to complete other processes such as a medical test and have sufficient life insurance.
Factor in the cost of transferring your funds from sterling into a foreign currency – fluctuations in the market can have a notable impact on your budget. Talk to an international payments and currency specialist about limiting your currency risk.
Cost of living and pensions
You’re looking forward in retirement to slowing down and enjoy the finer things in life. The perk of living overseas is that food, utility bills, entertainment, and transport can be considerably cheaper depending on where you head, so your budget could stretch further than in the UK.
Make a plan for your pension, however. You can still claim your state pension from overseas when you reach UK retirement age and receive it into an overseas account, but not all private pension providers will pay into foreign accounts. One option is to transfer your savings into a Qualifying Overseas Pension Scheme (QROPS) to limit your tax liability.
Watch out too for frozen state pensions in countries such as Australia, Canada and New Zealand. In these countries, UK pensions are not indexed, so the annual triple-lock does not apply and your pension’s buying power therefore would not increase over time.
Know your visa and residency requirements
To satisfy residency requirements in your new country as a retiree, you’ll typically need to show that you can support yourself through income (pension) or assets (property or investments). Since Brexit, that applies to the EU too.
If you’re planning to divide your time between the UK and another country, there are rules you’’ need to follow. For example, you’ll be limited to 90 days at a time in the EU or 6-months for a US B-2 visa. Meanwhile, Australia has its own retirement visa pathway but you’ll need to show that you have contributed to the community as a long-term resident.
Wherever you lay your roots, it’s wise to seek legal advice on what rules apply for your chosen country.
Retiring overseas may come with a few extra considerations than staying put in the UK, but the rewards can be well worth it. Take it one step at a time – and don’t be afraid to ask for support from your team of specialists. Here’s to making the most of your golden years, wherever you choose to call home. We at Home Search Overseas are here to help you every step of the way…
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