Deciding where to live could be one of the biggest considerations you make about your retirement. You may decide that you love your current home, and you never want to leave. Alternatively, you might see retirement as an opportunity for a big change.
If the latter describes you, then you wouldn’t be alone in this. In fact, MoneyWeek reports that 79% of Brits want to retire abroad.
There are several reasons why many people are looking overseas when making retirement plans, including the cost-of-living crisis. Indeed, 36% of people said they would retire outside the UK so they could enjoy a lower cost of living.
Naturally, seeking out sunshine is also a key reason for retiring overseas, with 46% saying they wanted better weather.
Yet, even though there are lots of potential benefits, retiring abroad is a significant change. As such, it is important to do your research and carefully consider the location.
When deciding where to retire abroad, there are some key things to check:
- The cost of living – The cost of living varies in different countries, and while some costs like property may be lower, other expenses like food or fuel, for example, could be higher. Therefore, you need to consider all your monthly costs to get a sense of how affordable a country is. Also, bear in mind that the cost-of-living crisis is affecting countries across the globe, so some locations may not be as cheap as you expect.
- The culture and language – Consider how you will deal with the language barrier (if there is one) and whether the culture fits with your desired lifestyle.
- Visa requirements – Each country has its own visa requirements and, while some actively encourage people retiring there and make it easy, others will have strict criteria you must meet.
- Taxes – The amount of tax that you pay on your income can affect the lifestyle you are able to afford. Make sure that you account for this cost when calculating your budget.
- Basic State Pension - If you retire abroad to any other country, you will not get any annual increases in your state pension. However, there is an exception – if you retire abroad 'part-time' but live in the UK for six months or more each year.
- Support for retirees – Some countries offer additional support for retirees such as discounts on utility bills, for example. It may also be a good idea to research the healthcare system to see what support you can get if you fall ill.
If you contemplate all these factors, you can hopefully decide whether a country is the right retirement destination for you or not.
In the meantime, to give you some inspiration, here are some of the best places for Brits to retire abroad.
Portugal is a popular retirement destination for Brits as it offers a mixture of medieval architecture, beautiful sandy beaches, and incredible food. Porto and Lisbon are favourites among retirees looking for great museums and galleries, vibrant nightlife, and a rich history. Alternatively, the Algarve is ideal if you want sunny beaches, and there are some nice smaller towns where you will find a quieter pace of life. Portugal is well-suited to retirees because the visa requirements are not particularly strict. The minimum passive income for a visa, according to Atlys, is only €8,420 a year for the main application. You then need another 50% of this amount for each adult on top of this, and this can come from your pension. This makes Portugal a relatively easy place to retire to. Additionally, the government offers free language lessons for migrants, which can make it easier to assimilate once you are there. Portugal is also considered one of the safest EU countries to live in.
France is another common retirement destination because it is close to the UK, the food and drink is world-renowned, and the weather and culture vary throughout the country. As a result, France offers a wide range of options in terms of the lifestyle you want in retirement. You could move to a small village in the south if you want somewhere quiet with excellent weather, for example. These rural areas tend to have a lower cost of living than urban centres too. Alternatively, you could retire in a larger city like Paris or Marseille where you can enjoy rich culture and history. Other popular locations to retire in France include Lyon, Bordeaux, and Pau. It is slightly more expensive to retire in France than Portugal as, according to the Immigration Advice Service, you need to prove that you have an annual income of €14,772. That said, this is still relatively affordable, and you can enjoy good quality public services as a result. Indeed, France has a great healthcare system that covers most medical services once you have been living in the country for three months.
Spain is a typical retirement destination for Brits who want sun, sea, and sand. The cost of living is also relatively low and there are some affordable properties, so you can enjoy a comfortable lifestyle. For example, according to Clear Currency, the average cost of living in Spain for one person is €633.20 a month. In comparison, Wise estimates that the average cost of living in London is £919, without taking rent or mortgage payments into account. As such, your money may go a lot further if you live in Spain. It is important to note that property prices vary a lot depending on the location. While there are some affordable properties in rural areas, the prices could well be the same or higher than in the UK if you look in the centre of major cities. The income requirements in Spain are also stricter than many other countries. According to Expatica, you need an income of €27,108 a year, plus an extra €6,778 for each additional family member.
Panama has become a popular retirement destination for UK expats in the last few years because the locals are very friendly, there is a nice slow pace of life, and the weather is hot all year round. Further to this, the healthcare system is excellent and it’s a very safe country too. There are also some incredible nature reserves and tropical beaches to visit. The Government hopes to attract retirees with a range of benefits, like a 25% discount on utility bills and airline tickets, and a 50% discount on sporting events or cinema tickets. There are also discounts on basic medical tests like eye tests or dental exams. Panama is perhaps one of the easiest places to retire as the only visa requirement for permanent residence is that you have resided in the country for five years legally on a temporary visa. Furthermore, according to the British Expat Guide, you can even fast track your permanent residency if you buy a property with an equivalent value of $300,000.
Australia is a popular choice because the culture is relatively similar to the UK and there is no language barrier. You also get amazing weather, culturally rich cities, and lots of great beaches and natural beauty spots. Additionally, you can transfer your pension into an Australian “superannuation fund” when you retire there. This pension scheme, which is a common workplace pension option for locals, allows you to draw an income tax-free. In practice, this means that you benefit from tax relief on your contributions while in the UK and you can withdraw it tax-free after retiring in Australia. While you may incur some costs for transferring your funds, you will likely be able to retain more of your retirement savings this way. That said, there are several potential downsides to retiring in Australia that you may need to consider. First, the distance from the UK makes it expensive to visit family. Additionally, the entry requirements can be quite restrictive. According to Expatra, it is easier to get a visa if you have family in Australia already. But if you do not, you may need to prove that you can invest a significant amount of money in the country, either through a business or private investments.
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This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.