Pros and Cons of Retiring Abroad, from Shelter Offshore

Friday May 29th, 2009

Nothing is ever totally clear-cut is it?  Up until the beginning of last year it seemed that moving abroad in retirement and soaking up the sun in a villa in Spain or perhaps Cyprus was a no brainer.

Retirees could sell their property, cash in on the equity increase, cash in on a strong pound and move abroad and have a healthy and wealthy existence in a lower tax country.

However, now that the housing market has stalled at home and abroad, the mortgage market has all but died and the British pound is a weak pretender in the face of a strong euro, it isn’t such a straightforward decision for many would-be expat retirees about whether they should stay or go.  So, in this article we examine the pros and cons of retiring abroad so that if you can’t decide what to do, you will be given all the information tools you need to make the right decision.

The Pros of Retiring Abroad

The number one pro has to be the weather.  Let’s face it; no one lives in Great Britain for its climate!  Therefore, in retirement when you can in theory live anywhere in the world, why wouldn’t you choose somewhere with better weather than Britain?  For many people in retirement when the aches and pains we all start to feel as we get older begin to bite a little harder, a warmer, less damp climate can be as good for the body as it is for the soul.  Therefore, if you suffer from anything such as arthritis or even SAD, moving abroad to the Med or beyond can be a good idea for the sake of your health.

Whilst it is not necessarily true that you can move anywhere in the world and enjoy a cheaper standard of living nowadays what with the weak pound, you can still save tax by moving abroad to some countries.  Take Cyprus for example, it has one of the lowest personal tax rates in the whole of Europe, and for retirees the tax is even lower standing at a maximum fixed rate of just 5% at the time of writing.

There are also countries such as Belize, Panama and Malaysia where retired individuals can find a tax advantageous lifestyle, and countries where the cost of living is lower than in the UK too.  New kids on the overseas property block such as Brazil, Egypt, Tunisia and Morocco all boast a cheaper cost of living for every day goods and services, and none of these countries are affected by a strong euro either – meaning a pension income can go far further.

There are overseas pension schemes called QROPS that are available to expatriates who are moving abroad in retirement.  By moving your pension into one of these British government backed schemes you can avoid the requirement of buying an annuity with your pension, you can leave any pension residual value to your heirs in your will, and you can have more control over when and how you take your pension and spend it.

If you get decent medical insurance in place you can potentially benefit from at least as high a level of care as you would get in the UK under the NHS system, and of course, by living in the sunshine, eating fresh food, benefiting from being more active thanks to the better climate and being more relaxed about life, you are probably less likely to suffer from significant health problems, and you never know, you might even live longer if you move abroad.  Okay, so we can’t guarantee that one!

Another pro of moving abroad is that you will probably be inundated with family and friends at all times of the year as they come and visit and make the most of having people they can stay with in a desirable place abroad!  Therefore, you will never be lonely, and if you find you have any spare time, you can put it to good use and learn the new language in your chosen country, you can learn about its history, culture, religion or just about its traditional food and drink.  So, you can broaden your mind and your social circle by moving abroad too.

The Cons of Retiring Abroad

One of the major cons is the hassle factor involved.  There is so much to organise – you may have to sell one home and buy another, you may have to arrange visas and the shipping and importation of your goods.  You will have to learn where new services are and how you access them and all of this can be overwhelming for some people.  However, as long as you’re moving to an accessible nation where other expats have already made a home, chances are there will be support groups in place to advise and assist.  You can begin by looking on the Internet to see if there are any forums where you can chat to other expats and learn about making the move a smooth one from them.

Another con is the cost of moving abroad - because even if you’re moving somewhere where your pension income will go far further, there are large initial outlays that you have to make.  You will have to pay for shipping, pay for buying and selling a property, pay for the property, perhaps buy a car or furnish a home.  Calculating the cost of a move abroad can be difficult – but it is imperative that you do your homework ahead of relocation so that you are not caught out or caught short, financially speaking.

When you set up your new life overseas you may find that you need to pay for health insurance or medical care - of course, if you move within Europe you may be covered if there is a reciprocal agreement between the British government and NHS and the government and health services in the new nation.  You need to look into this ahead of relocation, because getting health insurance when you are retiring can be difficult and expensive.

You may feel lonely as you are leaving your support network of family and friends behind.  However, this is usually only a temporary state because you will make new friends abroad, and you’ll find that your family and friends will soon be turning up on your doorstep for a holiday!

Finally, many of the cons for retirees thinking about moving abroad are related to money – even the concerns about health care come down to money at the end of the day – because with money you can access the services and care you need, without it, you could be left stranded.  It is often prudent therefore to speak to a financial adviser ahead of any move – an adviser who can understand things like international health insurance, QROPS and how your tax status changes when you move abroad. 

By speaking to such an individual you can get an idea of whether your finances will survive a move abroad, and if they will, how best they can be protected, saved and utilised to ensure you have a healthy, wealthy and fantastic new life abroad in retirement.  If you would like us to put you in touch with an international adviser ahead of any move decisions so that you can gauge their opinions and ask their advice, and we will put you directly in touch with someone who can help you.

For more information visit:
Shelter Offshore