When the average person thinks of retirement they think about having more time with family and more time to spend at home. Still, there are some who want to experience a once-in-a-lifetime event that is very different from their working life. Some people might want to start a new hobby or they may want to participate in voluntary work. Then, there are those who want something totally different by retiring overseas.
Some of the top places that retirees choose include Italy, Australia, France, Spain, and America. The thought of enjoying year-round sunshine along with cheaper living cost and an easy pace of life can be very alluring. But if a retiree fails to prepare properly, the dream can become a nightmare.
If someone is going to seriously consider retiring abroad then they need to plan for the challenges related to language, healthcare, lifestyle, and other factors that will depend on which country they are choosing to move to. The key consideration is usually finances.
If a person is wholly dependent on their state pension then it will be the core building block for their retirement income. When someone moves overseas it can impact those benefits. There are some countries that have a reciprocal agreement with the UK’s state pension which will allow the retired person to receive their pension as expected but there are other countries where this doesn’t exist. Any country within the European economic area as well as some major countries such as America are included among those who have a reciprocal agreement with the UK.
Countries such as Canada, Australia, and New Zealand are among those that do not have this reciprocal agreement with the UK. If you were to move to one of those countries it would have a dramatic effect on the income that you get paid. The reason for this is that the state pension is frozen for citizens of the UK who moved to those countries. Since your pension is frozen it means that as the years pass by other UK citizens will be getting cost of living raises while yours will remain frozen at the amount that it was when you first moved abroad.
Brexit could end up impacting the reciprocal agreements that are in place. As it currently stands those who move to any country within the European Union will automatically get the annual increases. But with Brexit, those arrangements are in jeopardy and it is not yet known what the result will be.
Anyone who manages to use their pension to buy an annuity before they make the move overseas will usually continue to receive those payments in sterling to a UK bank account. If the retired person moves to a country that has a double taxation treaty with the UK then they can ask the HMRC to make those payments without deducting taxes. This does come with a currency risk as you move money to an overseas account. Often you will find that using a currency broker can reduce those risks.
Another option would be to change your pension to a Qualifying Recognized Overseas Pension Scheme also known as QROPS. This will usually require the help of an expert because it can be a complex situation. With the help of an expert, you can be guided toward the best solution.
The modern age of air travel allows people to more easily consider living abroad. But because financial aspects are always a concern, then things like pensions and taxes need to be seriously considered. It is usually recommended that a retired person get professional advice to fully understand the complexities of retiring abroad. Look at this site if you wish to know the UK pensions options for expats.
Essential Tips For Retiring Overseas
You should start by understanding what your pension will be. Make sure that the country that you’re planning to move to has a reciprocal agreement so that you can get the maximum pension and associated annual increases. You will need to talk with HM Revenue and Customs so they at you’re able to work out the appropriate taxes. You will also need to work it out so that the pension is paid without having the tax deducted so that you can pay the country of residence along with the UK without overpaying.
You should understand the welfare rights that you have or don’t have when living abroad. When exchanging money you will need to pay attention to exchange rates and to shop around. Make sure to put in the appropriate homework studying the cost of living and other concerns related to the country of destination. You should also investigate medical insurance and the cost of healthcare where you plan to live.
If you plan on keeping property in the UK and you want to rent it out you’ll need to let your insurance company and mortgage provider know that that’s what you want to do. You will also need to let your local Council, as well as financial institutions and utility companies, know when you plan to leave. Finally, make sure to arrange to have your mail forwarded by the Post Office.