Retiring abroad in the brave new pensions world

The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.

Retiring abroad

“This is nice, wouldn’t it be good to retire somewhere like this?”

No doubt this thought has crossed the mind of one or two of us while relaxing on holiday in some distant land. However, sadly, the financial realities of moving abroad to retire don’t always marry up with the dream.

For those of you who picture a tranquil retirement overseas, ensuring that your finances are in order is of the highest priority. There are number of areas that you will need to ensure you have a firm grasp on before you sell-up and head off to foreign climbs, the first being the cost of living. Spending an extended period of time in the country you’re planning on retiring to is a good way to test how much you would need on an average month and compare it to your current life in the UK.

Understanding what kind of lifestyle your pension, savings or investments will afford you may bring you back down to earth with a bump. Scottish Friendly’s latest ‘Disposable Income Index’ found that over 55s have on average just £208 left in their pocket each month after essential bills and expenses have been paid. How far would your money take you abroad? Will you be able to afford more because of the cost of your home is cheaper, or will you find it tougher?

It’s also vitally important to consider the tax implications of any move abroad. The tax systems for a Briton living abroad works differently in each country and you should also not assume that a Commonwealth country will be more forgiving. For instance, you may be surprised to find that expats living in Australia don’t benefit from annual increases in the state pension, because there is no such agreement in place between their government and the UK.

It is because of these little idiosyncrasies that it is vital that people do their research before taking the plunge and moving abroad. Make sure you consult with a financial adviser or retirement specialist to help you to prepare a sound plan, but do make sure that you have personally left no stone unturned.

The importance of a financial plan which includes your long-term as well as your short-term goals should not be underestimated and a large part of this plan should be to ensure you have a good savings pot in case things don’t go as planned. Making use of a New Investment ISA before retirement could be a viable way to build up a pot of money which could help towards affording a dream property abroad as well as your desired lifestyle. However as with all stock market investments, the value of your investments can fall as well as rise and you could get back less than you have paid in.

With good research and preparation there is no reason why your retirement cannot be spent in paradise. Everyone should chase their dreams and no more so than in retirement. If you prepare now, you could build towards making that dream move and while away the days in peace on whichever distant beach hut, mountain top villa or jungle hideaway you so desire.

No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting Advisers may charge for providing such advice and should confirm any cost beforehand.