Spain has come top of a poll to reveal Brits’ most popular overseas retirement destinations. America came second in the rankings, followed by Australia, according to the research by financial services company Retirement Advantage.
However, the decision to leave the European Union has led to a ‘Brexit effect’ that makes it less likely people will move abroad.
Andrew Tully, pension technical director at Retirement Advantage says: “We dream of year round sunshine and an easier pace of life when we retire, and a number of us are hoping to enjoy just that with plans to move abroad. Cheaper living costs and potentially cheaper property than the UK can be strong draws, but without the right preparation, your retirement dream can quickly become a nightmare.
“Without the right planning and financial advice, you can quickly find yourself caught out by local tax laws, currency exchange rates and other financial arrangements.”
- Read Moneywise’s guide to How to retire overseas.
Brexit has knocked the confidence of people with two thirds (62%) saying the referendum result has made it less likely they will move abroad. This is especially so for the over 55 age group, 84% of whom said they were less likely to move abroad as a result. However, 38% of people say the result has meant they are more likely to move abroad when they retire.
The nation’s favourite retirement destinations this year are:
|European destinations||Outside Europe|
|1st: Spain (19.4%)||1st: America (15%)|
|2nd: France (6.1%)||2nd: Australia (7.2%)|
|3rd: Italy (5.6%)||=3rd: New Zealand (3.3%)|
|4th: South East Europe (4.4%)||=3rd: The Far East (3.3%)|
|5th: Portugal (3.9%)||5th: Canada (2.8%)|
What happens to your state pension?
Andrew Tully says: “Currently if you retire to live in the EU your UK state pension is protected by what is called a ‘reciprocal arrangement’. What this basically means is any increases to your state pension are protected and paid in line with retirees living in the UK. When we exit the EU these arrangements will form part of the negotiations, and although we don’t know how they will be treated, it’s worth considering how your retirement finances will keep up with the cost of living.”
- Read our article Could Brexit scupper your overseas retirement plans?
Top tips for retiring abroad
- Get an estimate of your state pension here: https://www.gov.uk/state-pension-if-you-retire-abroad
- Seek independent financial advice before you move. Here’s how to find a financial adviser in 2016.
- Tell HM Revenue and Customs that you are moving overseas. This allows it to let you know of any UK tax liability you may have even though you are living overseas. And more importantly can allow any UK pension you have to be paid gross (no tax deducted) and taxed in your country of residence (only applies if the country you live in has a double taxation agreement with the UK).
- Check what reciprocal agreements are in place with the destination country regarding your UK state pension and other social security benefits.
- Find out about your welfare rights while abroad.
- Keep an eye on exchange rates.
- Check the cost of healthcare in the country you are thinking of moving to, and consider some form of medical insurance.
- If you decide to keep your property in the UK you will need to let your mortgage provider and insurance company know if it will be rented or remain empty.
- Do your homework on the cost of living in the country you want to move to.
- Notify utility companies, financial institutions and your local council when you are leaving.
- Contact the electoral register, and arrange for mail forwarding via the Post Office.
For further tips, information on reciprocal agreements, and to view and download maps of the results, please go to http://www.retirementadvantage.com/retirement-planning/retirement-hotspots.