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You'd be daft to retire abroad

Harvey Jones
by Lovemoney Staff Harvey Jones on 06 August 2012  |  Comments 13 comments

Spain, despite its troubles, is still the top retirement destination for Brits abroad. But is heading overseas for your final years a good idea?

You'd be daft to retire abroad

You dream of retiring abroad, don’t you? Go on, admit it. Given the summer we’ve had, and the economic gloom, who wouldn’t be planning a retirement in the sun?

Golden mornings. Easy-going locals. Beachfront bars. Lower heating bills. Cheaper shopping. Smug phone calls home to friends and relatives rotting in the rainy UK.

Of course you dream about it. Because you’re daft.

Daft as a brush

You’re not alone. Millions of Britons are just as daft as you. I also have my daft moments, when I dream of a retirement sipping ice-cold cerveza in the sun, rather than warm beer in the cold. Our number one retirement destination is Spain, and rightly so. It’s a fabulous country, despite its current troubles.

France is next, followed by Australia, Ireland and Cyprus, according to new research from retirement specialists MGM Advantage. They all have their charms.

We don’t just dream about retiring over there, we do it. Hundreds of thousands of us.

We’re that daft.

Living the nightmare

And lots of us come unstuck. Some Britons have seen their £350,000 villa in Valencia torn down in front of their very eyes, because their builder didn’t get planning permission.

Others have slapped down a deposit on an off-plan apartment block that was never completed, because the builder went bust halfway through.

Still more have been forced back to England by the collapse of the pound, and forced to rent miserable digs because they can’t offload their foreign home at any price.

Growing numbers are trapped in Spain and Greece by the downturn, and can’t claim local social security benefits. Spain has just introduced new laws demanding EU citizens supply proof of income if they want to live in the country for more than three months, to avoid becoming “a social burden for the state”.

Many simply don’t like living abroad. They get bored. They miss their families. They long for Tesco. Or they feel like an outsider in their picturesque Andalusian mountain village because they can’t get on with the local lingo, and suspect it wouldn’t make any difference if they did.

Others fall sick, and discover too late that the NHS won’t treat them despite a lifetime of paying UK taxes, because they are now classified as an overseas resident.

Daft, isn’t it?

FX-rated horror show

If you’re living on your UK pension in a foreign land, currency risk is a constant worry. When the pound crashed against the euro, expats saw their income drop 25%. Despite the recent recovery, it is still down more than 12%.

Many find themselves checking the exchange rate every single day. In volatile times, such as now, they check it every few hours. That’s no way to spend your retirement.

If you retire in Australia, Canada, New Zealand or South Africa, your state pension will be frozen, and won’t qualify for inflation-linked increases. Its value will steadily shrink in real terms, year after year.

As we live longer, this will become an even bigger problem. A 100-year-old British woman in Australia has had her UK state pension frozen at just £6 a week.

You’d be daft to expose yourself to these dangers.

Go on then, ignore me

Okay, I admit it. Some people love their foreign retirement. Maybe you will too. If you’re harebrained enough to give it a go, you have to prepare for it sensibly.

MGM Advantage suggests you protect yourself by doing the following:

  • Get a state pension forecast, to find out how much you have to live on. Do the same for your private and company pensions.
  • Do your homework on the cost of living in your chosen destination.
  • Understand the rules on claiming your state pension overseas, including whether it will be frozen.
  • Check your welfare rights while abroad.
  • There is no NHS overseas. Find out what you have to pay towards local healthcare, and what you can get for free.
  • Find out whether you still have any tax liability in the UK.
  • Work out what you’re going to do with your home. If you decide to keep it on, either empty or renting it out, you need to inform your mortgage company and your household insurer.

Don’t let me stop you

Living the foreign dream demands a lot of practical effort and hard work. It can also be an emotional wrench, especially if your kids start producing adorable little grandchildren, who you only see once or twice a year.

You may still make it work, but you have to be plan for every possible danger, of which there are plenty.

Anything else would be daft.

More on retirement:

Why young people MUST opt in to auto enrolment

Social care: thousands of pensioners lose home due to poor procedures

Annuity meltdown will eventually end

The next pensions scandal

Auto enrolment: should saving for a pension be compulsory?

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Comments (13)

  • gibboxxx
    Love rating 5
    gibboxxx said

    I too sometimes get seduced by the dream of a place in the sun or that ski apartment for my retirement. I then pinch myself back to reality. My main argument is why would you want to restrict yourself to one place..... surely, when retired and being able to travel outside of peak seasons you can pick up good long rentals at reasonable prices and let someone else worry about the maintenance, exchange rate, selling up etc.

    Report on 06 August 2012  |  Love thisLove  3 loves
  • Skintsod
    Love rating 32
    Skintsod said

    "Spain has just introduced new laws demanding EU citizens supply proof of income if they want to live in the country for more than three months, to avoid becoming “a social burden for the state”."

    If Spain can do this why haven't we? Once again we stick to the rules whilst others find ways around them.

    Report on 09 August 2012  |  Love thisLove  4 loves
  • unsworthsteve
    Love rating 22
    unsworthsteve said

    Good advice, and I say that as someone who has retired abroad and loves it (Thailand). If you cannot afford to live in the UK that implies that state pension is a significant part of your income and that implies that you will not be able to afford abroad within say 10 years of retiring there. So many Europeans come out here to Thailand with little savings and then struggle financially. Those that have been planning it for years and have done proper assessments of long run affordability are in seventh heaven with the climate, cheap prices (if you can adapt to local living) and exotic environment.

    The UK's insistence on denying any inflationary increases to the pensions of its departing senior citizens to most countries is one of the great unexplained inequality mysteries of government policy. Surely the UK should be encouraging its senior citizens to remove themselves from the Welfare State, not forcing them to stay. Sensible governments, like Norway, have policies to encourage senior migration and few other countries are as dog-in-a-manger about citizens who give up their residence as is the UK.

    Report on 09 August 2012  |  Love thisLove  1 love
  • albbu
    Love rating 15
    albbu said

    I found this a typical Harvey scare mongering piece full of half truths and misaligned facts.

    You have always had to produce proof of income if you are below retirement age

    and wish to have residencia in Spain.

    You can claim all available Benefits once you have worked on "Contract" or self employed and have paid into the taxes for two years ( agreed UK should adopt this and cancel all other related benefits for non contributing persons!!)

    Pension increases rises/ inflation are fully transferable between UK and Spain.

    Health cover is also fully transferable with the correct forms applied for and

    the health cover is excellent ( Learn the language tho' or pay for an interpreter.)

    If your buying do not trust any estate agents!!, they work for the vendor not the buyer, get an independent good solicitor who speaks good english and dont buy

    off plan, derelicts etc and ensure the property deeds are correct for what you are buying!!! No black money under the table deals, like the old days... the

    regulations are tighter and fraud is far less these days,, but be careful!!!

    Electricity is very expensive and bottle gas even more so, the winters are cold at night and the houses are like tombs, so you need lots of energy, but the winters are short and the days warm....Spain is a cold country with plenty of sun!!

    On the plus side the food is fresh and wine is fresher and cheaper and the social life around the Brit communities is great.

    My personal view is ...DONT BUY!! Renting is so cheap you can get a fab villa for about €1000pm and a modest 2 bed apartment for about €450 all in, so rent, enjoy life and if things go wrong you can just walk away.

    That's my modest view after 10 years retired in Spain with few regrets!!

    Report on 09 August 2012  |  Love thisLove  1 love
  • AdAstra100
    Love rating 26
    AdAstra100 said

    I thought that it was good advice on points to consider but "Spain has just introduced new laws demanding EU citizens supply proof of income if they want to live in the country for more than three months, to avoid becoming “a social burden for the state” ?

    If this is possible, or actually exists in the country as allbu says, why the hell can't we apply the same criteria for the UK? Or is in only non working pensioners who have to meet this requirement?

    Report on 09 August 2012  |  Love thisLove  2 loves
  • anonyy
    Love rating 16
    anonyy said

    My parents emigrated back to Jamaica 10 years ago, I can't see them ever coming back here.

    Report on 09 August 2012  |  Love thisLove  0 loves
  • spanmik
    Love rating 6
    spanmik said

    Just got back to the UK after 9 lovely years in Spain. Nice comments but it's freezing in the houses in winter the Spanish haven't heard of insulation.

    Those weak kneed liberals want the winter fuel allowance cut for people in Spain, and the like, they should try winter there in a normal house not some rich pal's who had his home designed and built.

    I left because the health system let me down when I needed it, so it was back to UK weather for us.

    Report on 09 August 2012  |  Love thisLove  0 loves
  • OorWullie
    Love rating 38
    OorWullie said

    Having been retired for 25 years I have never had any desire to move abroad. In my younger days I spent 10 years with the Royal Navy and travelled extensively but always enjoyed returning to blighty. Wherever I go on holiday after about a week I am keen to return back to the UK. My only dream on retirement was not to be compelled to work and I am living this dream. The value of my pension has decreased considerably since retiring so the cost-of-living today makes it more difficult to live on one's pension but, other than this, I love this old country and I am enjoying retirement.

    Report on 10 August 2012  |  Love thisLove  1 love
  • george sanders
    Love rating 1
    george sanders said

    I have lived abroad so far for 10 years and do not miss the UK at all. When coming back I am struck by the enormous amount of traffic, the fact that London, where my family have lived for 400 years is no longer an English town, everywhere seems so crowded and food and wine is expensive and nearly always bad. I live in France, where the health service is unbelievably good, property a reasonable price, wine and food good, the prices of utilities less than I paid in the UK 10 years ago, the public services amazing, the weather much better - see especially the way the UK has suffered this year? I am probably somewhat different from the average because none of my children, one a Ph.D.Cantab., live in the UK any more and to visit them I drive across Europe on good roads, stay in first class hotels for less, see wonderful scenery eventually staying in towns where Brits like to holiday. I do speak French, which helps, and do all sorts of things very few do in the UK because I have a wide circle of friends. Infact, when you move to another country, you must "put your bread upon the waters" and make efforts to mix into the host country. As to the exchange rate, I survived when it was low and am enjoying it very much at the current rate. But, of course, according to your correspondent, who has not lived abroad, I am daft?

    Report on 10 August 2012  |  Love thisLove  1 love
  • yocoxy
    Love rating 132
    yocoxy said

    @ourwillie. You're living the dream In this thread but taking about declaring bankrupcy in another.. Do you have a twin or schizophrenia?

    For all the Daily Mail readers.. You maybe interested to note that there are rules on the benefits that immigrants can claim and how long they need to work/contribute before they can claim anything..

    Report on 15 August 2012  |  Love thisLove  0 loves
  • tuttogallo
    Love rating 74
    tuttogallo said

    My plan is to keep a small well insulated bungalow in the UK and to travel extensively. That way I will avoid many of the dangers and pitfalls of moving abroad. If I like a particular place, I might even rent a small place.

    We all have to die some time and most of us will have a few "hopital years" before that. When that time comes I want to make sure that I have a place in the UK and my UK residency.

    For those of you who do decide to go abroad, for heaven's sake LEARN TO SPEAK THE LOCAL LANGUAGE and to read and write it for that matter. How else can you cope with forms, bills etc and have a social life? Anyway it's a matter of respect to the locals whose guest you are.

    Report on 24 August 2012  |  Love thisLove  0 loves
  • spanmik
    Love rating 6
    spanmik said

    I will go back, on holiday, to Spain and enjoy again the excellent fresh food and wonderful wine.

    Report on 09 September 2012  |  Love thisLove  0 loves
  • Henry-GBG
    Love rating 46
    Henry-GBG said

    I had not the slightest intention of moving abroad but went to Sweden by accident a few years ago (on the way to somewhere else), spend half a dozen summers in the country and eventually realised that I was more at home in Sweden than the UK and moved about a year ago.

    No regrets so far but it is essential to learn the language and make an effort participate in local activities.

    Report on 10 February 2013  |  Love thisLove  0 loves

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