Retiring abroad could cost you a fortune

One in 10 Britons over the age of 50 are considering retiring abroad, with Spain topping a poll for the most popular destination.

Reasons for going abroad include the prospect of a better lifestyle, a cheaper way of life and better weather.

But retirement specialist Retirement Advantage is now warning that, without the right planning and financial advice, your new life in the sun could very quickly become a nightmare.

Andrew Tully, pensions technical director at the firm, said: ‘Retirement means different things to different people, including spending more time at home with the family, starting a new hobby or volunteering. 

"For others it’s the appeal of retiring abroad, with the prospect of a better lifestyle, better weather and cheaper living costs than the UK.

"However, without the right planning and financial advice, your retirement could very quickly become a nightmare. Local tax laws, currency exchange rates and other financial issues can easily catch out the unwary.

"For example, if you retire to some countries, you will not be eligible for increases in the state pension.

"Countries in the EU, as well as many others, have reciprocal arrangements with the UK, meaning your state pension will increase each year. However, other countries including Australia, Canada and New Zealand do not, which means the state pension will not increase once you move overseas.

"For example, a single person who retired in 2007 to a country where there is no reciprocal agreement in place would have seen their state pension frozen at £87.30 a week. It is now £122.30, a difference of 40% - or £1,820 less annual income.

‘When we leave the EU, reciprocal arrangements will form part of any deal reached, so it is unclear what the position will be in future.

"So it’s worth keeping in mind how your financial position would be affected by changes to these agreements as well as how incomes paid in sterling are affected by currency exchange rates.

"To help navigate the complexities of retiring abroad, especially given the uncertainties from Brexit, it is vital people seek professional financial advice."

One in 10 Britons over the age of 50 are considering retiring abroad, with Spain topping a poll for the most popular destination.

Reasons for going abroad include the prospect of a better lifestyle, a cheaper way of life and better weather.

But retirement specialist Retirement Advantage is now warning that, without the right planning and financial advice, your new life in the sun could very quickly become a nightmare.

Andrew Tully, pensions technical director at the firm, said: ‘Retirement means different things to different people, including spending more time at home with the family, starting a new hobby or volunteering. 

"For others it’s the appeal of retiring abroad, with the prospect of a better lifestyle, better weather and cheaper living costs than the UK.

"However, without the right planning and financial advice, your retirement could very quickly become a nightmare. Local tax laws, currency exchange rates and other financial issues can easily catch out the unwary.

"For example, if you retire to some countries, you will not be eligible for increases in the state pension.

"Countries in the EU, as well as many others, have reciprocal arrangements with the UK, meaning your state pension will increase each year. However, other countries including Australia, Canada and New Zealand do not, which means the state pension will not increase once you move overseas.

"For example, a single person who retired in 2007 to a country where there is no reciprocal agreement in place would have seen their state pension frozen at £87.30 a week. It is now £122.30, a difference of 40% - or £1,820 less annual income.

‘When we leave the EU, reciprocal arrangements will form part of any deal reached, so it is unclear what the position will be in future.

"So it’s worth keeping in mind how your financial position would be affected by changes to these agreements as well as how incomes paid in sterling are affected by currency exchange rates.

"To help navigate the complexities of retiring abroad, especially given the uncertainties from Brexit, it is vital people seek professional financial advice."