A Step by Step Guide to Retiring Abroad
For some people, it is dreams of retiring abroad which motivate the latter decades of hard work and keep them going during the 9-5 slog. Enjoying a well-earned, more permanent rest beside the sea of foreign shores is a fantastic way to kick-off your retirement in style, much to the envy of those back at home. However, it’s not a decision that should be taken lightly, as there may be more complications behind the scenes which mean it’s not simply a case of booking that plane ticket and jetting off across the water.
You may already have a holiday home abroad and are looking to make it a permanent abode, or perhaps you want to make a spontaneous leap into the unknown. Either way, we’ve got a checklist of things to think about before you set off…
Step one: Where can you go?
One of the first things to consider is which countries you’re eligible to live in. There’s no point making elaborate plans for your jungle hut in the Congo if you’re sent back on a plane to Heathrow before you’ve made it past the border. As a UK citizen it is within your rights to live abroad in any EU or EEA member state, but there may be more strict requirements for getting a visa further afield. It’s a good idea to check the website of the country you wish to move to and see what financial requirements you’ll have to meet in order to emigrate permanently.
Step two: Considering the complications – Language
It’s important to think about the language barriers you might face as part of your move. In most expat-heavy destinations, this might not necessarily cause a problem, but if you’re looking at moving to a more remote location language could be a bigger issue. The simplest activity, such as ordering a taxi, or trying to set up a phone contract, will bring a serious headache if it’s all conducted in pidgin English or a language you can only half understand. Our brains struggle with new languages more and more as we get older, meaning that taking classes well in advance could make the transition a much smoother one.
Step three: Considering the complications – Cost of Daily Living
You may be surprised at how the cost of simple items can differ entirely to those in the UK. For example, basics such as baked beans, toiletries and familiar brands like McVities, Cadbury or Kellogg’s, which you can purchase here relatively cheaply, could come with extortionate price tags abroad. It might be a good idea to stock up on items you know you’re going to struggle to find, and to check that you’ll still be able to live comfortably in the style you’re used to in your chosen destination, without too much of an overhaul. Even the most adventurous of us will crave home comforts at some point.
Step four: Considering the complications – Healthcare
Healthcare is a huge factor to consider when deciding to move overseas. The NHS is a rare and exceptional (almost) free service, and you’re unlikely to find something similar across the sea. Choosing to settle abroad permanently means giving up access to this free healthcare, with the exception of emergencies. In popular EU destinations your healthcare is likely to be provided partly free, with a necessary supplement of around 30%, whereas in other countries where there are no government sponsored services, it is essential to purchase insurance on a private basis.
Step five: Transfer your state pension
Pensions are likely going to be your main means of survival when retiring abroad. Transferring your state pension scheme is relatively easy, although if you haven’t chosen an EU/EEA country things could become tricky as your pension will be frozen at the amount set by the government at the time of your departure, and won’t increase with inflation.
Step six: Transfer your private pension
Private pension schemes could be subject to tax if paid into a foreign account. However, if the pension scheme you wish to transfer to is registered with HMRC as a Qualifying Recognised Overseas Pension Scheme then you may find certain benefits, such as a removal of the UK tax net barrier. Be careful though – although the UK has recently introduced a system of a 25% tax free lump sum, other countries’ tax systems may not permit such a generous tax-free withdrawal.
Step seven: Moving Pets
Pets – if you’ve got furry friends you were hoping to take with you across the water, it may be sensible to check with the DEFRA if your mutt or moggy will face any restrictions.
Step eight: Friends and Family
Keeping in touch with your loved ones is often a worry for people moving overseas. Although technology baffles the best of us, there are several ways of keeping in touch at a minimal expense with the use of easy-to-use programmes such as Skype, FaceTime and WhatsApp.
Step nine: Telling the Authorities
When you’ve chosen a destination and sorted out an address, it’s important to let the relevant authorities know about your new abode and provide them with forwarding details. This means contacting HMRC, and also your local council.
Step ten: Shutting down accounts
If you’re going to be paying for a UK-based bank account that you have no intention of using, it’s better to either cancel the account completely, or downgrade it to a standard, non-fee based account. The same goes for any credit cards – you could be better off cutting them up, rather than risk taking them abroad and having the additional complications of cancelling them from overseas. Mobile phone accounts, old insurance contracts you’ll no longer need, and any subscription memberships to magazines – don’t forget to cancel them, or change the addresses if you want to continue access.
It’s a big decision, but with more and more expats choosing to retire in style abroad where their pounds will stretch further, it’s definitely an option worth giving some serious thought.
Hollie Mantle is a blogger from London working in association with http://qropsreview.com – reviewing pension transfer destinations.