New research has revealed the top 10 destinations for people moving abroad when they retire.
If you are retiring soon and plan to move abroad you won’t be alone; over six million of us plan to move overseas when we retire.
So, if your one of the millions planning to move abroad and you want to relocate to a popular destination, or you would rather avoid hoards of fellow Brits, read on.
Most popular overseas retirement destinations
The most popular destination for retiring Brits is unsurprisingly Spain, with France and the USA coming in second and third. The full list is as follows:
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1st: Spain
2nd: France
3rd: USA
4th: Australia
5th: Far East
6th: Canada
7th: Italy
8th: South East Europe
9th: India
10th: Portugal
Source: MGM Advantage
Those people planning to relocate are split evenly between Europe and the rest of the world.
Andrew Tully, MGM Advantage commented: “A huge number of people harbour a desire to retire abroad. Thoughts of better weather, cheaper living costs and potentially cheaper property than the UK can be a strong draw. But, thinking that your regular holiday destination can also be your ideal retirement home might be hit with flaws. Without the right planning, savings and advice, you can quickly get caught out by local tax laws, exchange rates and other financial arrangements, turning a retirement dream into a potential nightmare.”
Tully continued: “You might also get a nasty shock later in retirement when you find your UK state pension does not increase annually because the country you choose to retire to does not have a reciprocal agreement in place with the UK. As an example, if you retired to Canada ten years ago, your UK state pension would now be worth 42% less than if you had retired across the border in the US. Or put another way, your pension would be worth £1,742 more a year by simply choosing the US as a retirement destination rather than Canada.” (Source: MGM Advantage )
Top tips for retiring overseas
Retiring overseas can be fraught with financial difficulties. Not only do you need to consider all the usual things any retiree would need to, you also need to factor in the additional complications of moving to a different country.
Here’s our top tips if you are thinking of moving abroad:
1. State Pension Confirm whether the country you are moving to is one of those where you won’t get an increase to your State Pension. For example, move to the USA and your State Pension will rise each year, move to Canada or Australia and it won’t.
Annual increases to your State Pension are incredibly valuable, make sure you can afford for your pension never to rise in value.
2. Cost of living Is the cost of living higher or lower where you are moving to? Most people know how much they spend each month here in the UK; estimating correctly the comparable amount overseas can be difficult.
Spend some time researching the living costs of your chosen country and make sure your pension income will be enough, both now and in the future.
Remember too, exchange rates will affect your ability to meet your living expenses, especially if your pension income continues to be paid in Sterling.
3. Bank accounts Check out international current accounts, which allow you to bank in different currencies. Having an international current account will also help you if you visit other countries on holiday or decide to move on again.
4. Healthcare We’re used to free healthcare at the point of delivery here in the UK, not every country is the same. Research the arrangements for your chosen destination and if necessary factor any extra costs, including healthcare insurance, into your financial plan.
5. Tell the taxman If you’re relocating overseas it’s important you tell HMRC (Her Majesties Revenue & Customs) here in the UK. If there is a double taxation agreement in place, this will allow your pension to be paid gross, with no tax deducted, and taxed in your new country of residence.
6. Mobile phones We’ve all got one (well nearly everyone has!) but you probably agreed your tariff based on living in the UK. Check that your current deal is the best if you are abroad by shopping around and considering alternatives.
7. House If you plan to keep your UK home, you should tell your insurance company that the property will either be empty for a period of time, or it will be let out. If you have a mortgage and plan to let out your property you will need to get permission from your lender.
8. Pension Most people turn their pension pot into an income by buying an Annuity or Income Drawdown. If you are moving abroad there might be alternatives which are more appropriate. Take advice before you go from an independent adviser, who is well qualified and experienced in dealing with people moving to your chosen country.
If you don’t plan to immediately take income from your pension pot, think about whether you should make final contributions whilst you are still resident in the UK. Once you live in another country, it is unlikely you’ll be able to make further pension contributions.
9. ISAs You can keep your ISAs when you move abroad, but you may not be able to make further contributions; check the exact situation before you go.
10. Tell people Whenever you move house you’ll have a long list of people you need to tell, the same applies when you move abroad. But remember, if you need to telephone companies from abroad to tell them of your new address, it could get very expensive, especially if they don’t have low cost numbers to use from overseas.
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