As George Osborne charges on with his plans to raise tax rates and trim public services, a lot of us will be sorely tempted to hop on a plane and emigrate to escape the chancellor's tough love. But is now the time to go?
With our battered currency in your pocket, moving to Europe or the US could be a painful experience.
Although we think we've had a rough ride during the UK recession, those neighbours we were once jealous of for moving to Spain, to spend their retirement in the sun, have arguably had it worse.
Indeed when sterling dropped below €1.10 (£0.91) earlier this year, a massive 70% of Brits living in Europe considered moving back home, according to foreign exchange specialist Moneycorp.
The aspirational dream of retiring abroad had turned into a nightmare. Retirees converting a UK pension into euros have felt the pinch particularly badly.
According to Julia Whittle, head of international at Punter Southall Financial Management, someone with a sterling-based pension who retired to Spain 10 years ago and received £1,000 per month would have exchanged this for around €1,600.
Today that £1,000 would be exchanged for nearer to €1,177.
She says: "That represents a 28.75% drop in real income over 10 years, and this ignores the effects of inflation, which could increase the pain. Those who could only just afford the move in the first place will now be reconsidering their retirement plans."
The slump in sterling has also hurt people who retired abroad more recently: the sterling/euro exchange rate has deteriorated by more than 25% since the beginning of 2007.
Brits sunning themselves in Florida have suffered too. According to Jonathan Spring-Rice, senior wealth adviser at Towry Law, the wealth adviser, the exchange rate was $2 to the pound in November 2008, but it's now around $1.40.
Expats who are finding it hard to adjust to their more expensive lifestyle will be cheered to hear that if they sell their overseas property, they will benefit from the weakness in the pound.
Unfortunately, however, house prices in many European countries have nosedived. "If we look at Spain, the fall in property prices and the fall in sterling have put off potential new investors for now, so sellers have to reduce their asking price just to try and entice buyers," says Nicholas Fullerton, director at currency broker FC Exchange.
"This, of course, means that even if they are lucky enough to sell, they may not benefit from the fall in the exchange rate because they have sold their property at such a discounted price."
Fullerton says almost all his clients with properties in the eurozone are thinking of moving back to the UK to try and take advantage of the exchange rate and because the cost of living has risen so much.
A silver lining
However, despite these nightmares, the housing slump means that now could actually be a good time for retirees and those approaching retirement in the UK to move to sunnier climes, far, far away from Osborne's grasp.
"You only have to look at the US and Spain to see how much [house] prices have come down," says Fullerton.
"It's a buyer's market, which means the supply of properties far outweighs demand and good deals can be had if you are willing to negotiate."
According to Whittle, prices in Spain have dropped around 10% since 2008, while bargains litter the Latvian landscape. House prices fell 50% in the Baltic country last year, following 30% losses the previous year.
We may not have hit the bottom of the market yet though, with more house price falls predicted in Europe as the Greek debt crisis rages on.
Whittle adds that there is also an over-supply of housing in Spain and Cyprus, which means further price falls are likely.
There could also be juicy bargains as the likelihood of countries dropping out of the euro becomes clearer.
Marcus Carlton, director of wealth manager HFM Columbus, thinks there's a chance that Spain, Greece and Portugal could crash out of the single currency and revert to their original currencies.
If that happens, he says, we can expect mass devaluation and a surge in demand for overseas properties in those locations.
Stuart Law, chief executive of property company Assetz, is optimistic about the government's proposals for economic recovery and believes the pound will soon become stronger. Then the "British buyer will become very influential in Europe", he says.
"The increasing strength of the pound could see the euro slide back to an exchange rate of between 1.25 and 1.5 euros to the pound. Europe's problems are deep-rooted and won't be easily solved, so it could remain like this for some time to come."
It's all in the planning
Law's advice for keeping your overseas retirement dream intact is to start planning now. Deciding what country to move to often comes down to personal preference or being near family and friends.
Beyond that, Law says retirees should consider countries that offer good healthcare and security, such as France and Spain. After choosing your destination, some careful thought about your personal finances is essential.
It's worth working out if you'll still count as a UK resident for tax purposes.
The rules are complicated, but broadly speaking you will remain a UK resident for tax purposes if you spend either an average of 91 days or more in the UK each tax year (calculated over a maximum of four years) or 183 days or more in the UK during one tax year. So be careful about too many trips back to the UK if you want to be a non-resident.
If, while living abroad, you receive income from the UK, for example from a pension, rent or investments, this will be subject to UK tax. This normally even applies if you become a non-UK resident.
However, in some instances a lower rate of tax may apply, or no tax may be levied, so it's best to seek expert advice.
Using currency brokers and some of their handy tools is a good idea for converting money in these volatile times.
FC Exchange provides a regular payment facility that allows clients to receive a monthly payment such as a pension at a decent exchange rate without incurring fees.
The minimum transfer is £500 per month. The firm claims that by transferring £1,000 per month, a client could potentially save £35 per month.
Forward contracts are useful for bigger sums such as funds for buying a property abroad. They lock in a rate of exchange before you actually need the money, meaning you can take advantage of a tasty rate even if you won't be using the money for another year.
This can give you peace of mind because you can then work out exactly what your new home will cost you.
"If you consider that over the course of one year rates can fluctuate by as much as 30%, it can be the difference of turning £100,000 into $200,000 rather than $140,000," remarks Fullerton.
If you're planning to sell your UK house to fund your overseas adventures, Fullerton advises taking things one step at a time.
"Get your property sold before committing to your overseas purchase and especially before purchasing any currency you may need," he says.
"If you can't sell your property in the UK, then nine times out of 10 it means that you can't go, which is desperately frustrating for those who have done so well to reach this stage of their journey."
Meanwhile, ensuring you receive pension payments at your new address is vital. Basic budgeting is also necessary to help you avoid too many shocks when you make the move.
"It is advisable to work out exactly what your income will look like after tax in your new country of residence. Then assess your outgoings and look at local prices to gauge what your standard of living will be," says Whittle.
It's imperative to speak to an expert about what local taxes you will be liable to pay. As well as familiar taxes such as income and inheritance tax, there may be other taxes such as higher social tax and wealth tax, so make sure you understand how they work.
You should also assess whether your assets are appropriate for your new country of residence; perhaps there is a more tax-efficient vehicle available to you.
Setting up a foreign bank account so that debit and credit cards are based in local currency is a sensible move and avoids the high charges that are connected with using a sterling-based card for currency transactions. It's also a good idea to retain a UK account.
According to Whittle, it is not easy to set up a UK bank account when you are a non-resident and a UK account will make it easier for you to make trips back to the UK.
Is it for you?
It seems there will be a lot of people moving back and forth across the globe this year. Whittle says she's seen a number of retirees abroad assessing whether they can afford to remain overseas and considering returning to the UK.
On the other hand, retirees hoping to snap up a bargain home in the sun are starting to look now. Whittle says rising taxation in the UK has also encouraged people to consider emigrating to countries where they would pay lower taxes.
However, she warns against choosing a new home solely on the grounds that it has a more appealing tax regime.
"Lower taxes don't necessarily mean a better standard of living," she says. "You need to assess the whole picture. In retirement, where people are living largely off capital and/or pensions, they can be reasonably tax-efficient in most jurisdictions if they get good advice.
"Retire abroad because you really want to live in that particularly country, not just for tax or cost of living reasons."
Fullerton gives one final tip: "The best tip is to do research, research and even more research, as you can never be too prepared when making a life-changing situation."
This article was originally published in Money Observer - Moneywise's sister publication - in July 2010