Originally Posted by tinkred
Me and the wife are after some good honest advice about being able to afford to retire to Tenerife. I am fortunate to be able to retire early, what I need to know is could I live not extravagantly but comfortably in Tenerife. I can choose to retire in October 2013 and have an income after uk tax of £1000 pcm or wait until March 2015 and have an income after uk tax of £1250 pcm. I would have to pay rent and bills out of this before living costs. Do you think its viable at either date above or not.
Hope you can help, kind regards to all.
I think a great deal depends on how "early" your early retirement would be - that is, how many years you would need to live on the income you have quoted before becoming eligible for your state pension to boost your income.
We came to live in mainland Spain just over six years ago, at a time when neither of us had any income from pensions coming in. We lived on less than £1,000 per month for the first two years, although we owned our house outright so had no rent or mortgage to pay, nor did we have a car (still don't). It was OK for a limited time, I think when you first move you are happy (hopefully!) with your new surroundings so don't feel the need to go on holiday, for example, but you do eventually begin to feel the need to spread your wings a bit. My OH was able to draw a Local Government pension after our first 3 years here, which increased what we were able to spend, and will become eligible for his state pension and a further small occupational pension in just under 18 months' time. In just over 3 years I will start drawing 2 occupational pensions myself, and in 10 years (should I be lucky enough to still be around by then) I should start to receive my own state pension.
If your early retirement pension will have to keep you both for more than 2/3 years, you have to bear in mind that prices will go up during that time. Also bear in mind that the tighter your budget is, the more any adverse movement in the exchange rate will affect you - as many expat pensioners found when the pound went down to near parity with the euro. It has recovered a bit since, but is still far from the €1.40 to the pound it was when we moved.
Do you know what kind of property you will be able to rent in Tenerife, and how much you will be left with to live on after rent? I don't know what prices are like there, but websites like this might give you some idea - some properties include utility bills up to a certain amount (which isn't common in mainland Spain):-
If you and your wife have been working and paying NI contributions in the UK up to the date you intend leaving the country, you can apply to the DWP for an S1 form which would entitle you to coverage in the Spanish state health system for up to 2.5 years. After that, however, you might have to pay for private health insurance to cover the period between the S1 coverage running out and when you become a State Pensioner. The situation on that is a bit unclear at the moment - the rules were changed last year so that new entrants to the country are required to show proof of income and medical cover to prove that they will not be a burden on the state when signing on the register of resident foreigners (which you are required to do after 90 days).
Personally, I would say it would be very tight to live on £1,000 per month and pay rent out of that even for a couple of years, £1,250 would be a bit better but you wouldn't exactly be living it up. You may have savings in reserve, of course, which would help if there should be some emergency, such as having to return to the UK at short notice, as I did only a month after moving here when my Dad was taken ill.