Perhaps the most important aspect of your planning when contemplating a retirement abroad is the financial aspect. If you get your money matters right before you go, the rest should fall in to place so much more easily!
If you’re at a point in life when you’re actively thinking about making a move overseas when you can finally put your feet up and enjoy the fruits of your hard work all these years, get the fiscal elements of your relocation straight in your mind first.
At Shelter Offshore we’d like to offer up 10 critical money matters to consider for all those of you who are thinking about retiring abroad. When it comes to financially related elements of your life, everything is personally and individually specific to you – so do take professional advice where necessary. But hopefully our list will get you planning and thinking in the right way to get everything lined up straight before you go!
1) The State Pension
- are you entitled to the state pension? Chances are, if you have spent any time working in the UK and paying British income tax and National Insurance Contributions you will have a certain degree of eligibility to the basic state pension. You need to find out how much you will receive, whether you can put a bit more in before you retire to get a bit more out when you retire, and whether, if you relocate abroad, your state pension will be frozen or not. With regard to working out if you should increase contributions, seek professional advice. With regard to whether your pension will be frozen or not it depends on which country you’re moving to, and to get a pension forecast visit the DirectGov Website.
2) Private Pensions and Investments
- if you’ve been contributing to a personal, private or company pension and/or you have investments you’ll be seeking to earn an income from, it’s time to get yourself organised and find out what money is where and what it will be worth to you as a pension fund. Perhaps you’re best advised to seek the services of a financial adviser to tell you how much money you can expect to earn from a given financial portfolio. Armed with this information you’ll be well aware of what you will have to live on in retirement and this may guide your country choice.
3) Currency Fluctuations
- the British pound is languishing at an all time low against many other currencies at the moment, proving that what goes up can come down! You need to learn how you can offset your risk when you move abroad by contacting currency specialists. They’ll discuss options you have for regular transfers of cash from the UK into another currency abroad, as well as how you can move any lump sums carefully and at the best rate of exchange possible.
4) Making Your Pension Income Work
- when you become non-resident for tax purposes in the UK, a whole world of new financial options and alternatives open up to you. This is called your expatriate advantage! For example, if you’re taking early retirement abroad maybe you can benefit from moving your pension to an offshore fund called a Qualifying Recognised Overseas Pension Scheme (QROPS) that’s backed by the British government but which can remove your obligation to commit to an annuity upon retirement. Seek the advice of an expatriate financial adviser – or allow us to put you in touch with our preferred solutions providers who can give you a free money makeover as soon as you move abroad and become an expat.
5) State Benefits
- are you currently claiming anything in state benefits from the winter fuel allowance to disability benefit for example? Check out whether you will still be able to claim abroad, and if you can, how you can organise payment and reviews of your benefits. Again, seek advice from the DirectGov website.
6) Affording Medical Care
- not all nations have a national health system that’s free like we have in the UK. What’s more, even if they do, as an expatriate retiree you may not have an automatic right to access it. What this means is that you have to find out in advance of your move whether you will have to pay for health insurance or cough up for any medical bills should they arise in your new nation. Forewarned is forearmed – and because medical bills can be steep, and in retirement as we progress through older age we usually require more medical care, medical costs need to be carefully assessed before a move abroad is made.
7) Rent or Buy
- as the housing market in the UK is flat at the moment, the pound is weak against many currencies and property markets around the world are generally suffering, you need to decide whether you should sell up and buy abroad, or perhaps rent out your old home in the UK and rent overseas for a while until things improve for example. Also, we always recommend you rent abroad to see whether your new country and life as an expat suits you – as it is far easier to see out, break or get out of a rental contract than it is to off load a property you’ve bought if you decide you don’t like living abroad.
8) Emergency Fund
- Make sure you have an emergency fund of cash squirreled away no matter what else you do with your wealth. This cash fund could be used if you need to get home in a hurry, if you have an unexpected medical bill, or if you just fall on a temporary tough time. Don’t be tempted to go without it – it’s a critical part of your money management – any financial adviser worth their salt will tell you the same thing. It needs to be easily accessible in an interest paying account…
9) Taxing Times
- you may be able to move abroad to a nation such as Cyprus where you pay far less tax on your retirement income or even a location such as Dubai where a pension can be enjoyed tax free. However, even if you move to a country life Spain or France where there are income taxes on pensions you can perhaps find ways of reducing or deferring tax through the way you structure your savings or investments. A financial adviser will help you find the right path for you as an individual and it may be a path that will see your wealth grow at a strong rate. Finally remember that ignorance is no excuse when it comes to taxation – so be aware of your obligations and fulfil them.
10) Sorting Out Inheritance Matters
- Make sure you have a valid will that covers all of your assets at home and abroad, that it is legally viable in all nations it cover, if required have multiple or multi-jurisdictional wills and always, always seek qualified legal advice to make sure your will is valid for the nation and assets it covers. Laws of succession differ from country to country – so don’t risk dying intestate or of leaving your heirs out of favour by mistake.
