Brits Who Retire Abroad Can Have It All If They Plan Well

Recent media reports about Britons struggling to make ends meet abroad highlight the one fact that we’re always trying to make clear here at Shelter Offshore.  I.e., that you have to plan well and very carefully if you want to succeed abroad.  The number one reason why expatriates ‘fail’ to make a success of their new life abroad is a financial one – pure and simple.

So, instead of it being a case of planning to fail it’s all about failing to plan!  And in this report we’ll show you that Brits who retire abroad really can have it all if they plan well.  We’ll look at how you have to budget, how to get your pension planning in place, your healthcare requirements considered and what a fluctuating currency can really mean to your quality of life abroad.

We’ll show you how to plan, using the cases of a handful of retired Britons living on the breadline in Spain as our examples of how it’s not done!  And at the end of this report you will be well armed with the knowledge that you need to set off on your new adventure abroad without a care in the world.

How Not to Retire Abroad

Making an assumption can be your downfall - as many retired Britons living in Spain can tell you.  If you assume that you will always be healthy, that the pound will always be a strong currency, that a foreign healthcare system will be as far reaching as the NHS and that you’ll have free access to it and that you will never need to worry about making ends meet, you could well be in for a very rude awakening.

A recent report in the Times highlighted that a significant number of Britons who have retired to Spain, faced the decline of the pound, the decline in quality of life this has caused and a decline in the value of their homes are now trapped in a cycle of debt and depression in a foreign land. 

These people assumed that their new life abroad in retirement would be a happy one and a healthy one - if not a prosperous one too as their houses rose in value, the pound was strong in the face of the euro and the sun almost always shone on the Costa del Sol.  However, now that many of these individuals and couples have aged a little and a few ill health problems have settled in, they are faced with the reality that the Spanish healthcare system and their right to access it are limited, that there is no such thing as free home help for example, that their homes are un-saleable as the Spanish property market has died, that their pensions are worth about a third to a half less than they were at the peak when the pound was so strong against the euro, that they cannot afford to return to the UK, and even if they did, they would have to wait for up to 6 months before they had eligibility to turn to the NHS for any health issues.

As highlighted in the Times report, some of these people are literally living on charitable handouts, others are seeking the support of the British consulate who is to provide aid and support to the 300,000 or so retired Britons living in Spain now; 100 care workers are to be employed in Spain through a partnership between the British consulate and Age Concern - but still this is not enough as there are many more individuals and couples who have inadvertently been caught up in a downward spiral in Spain.

These people relied on their property’s value, they relied on a strong currency in which their pension income was paid, they relied on having good health and access to healthcare facilities – and this, in a nutshell, is how not to retire abroad…

And now for a 5 step plan for you to follow so that you can retire abroad successfully…

How to Retire Abroad Step 1

If you want to retire abroad you have to go about planning your retirement in a relatively cold and calculating way.  You have to take into account the cost of living today versus your pension income, and how you can secure that income if it is in a currency other than the one you will be living and spending in.  It’s not just a currency’s fluctuating value against another one that can erode its value in real terms, what about inflation at home or abroad.  These are real factors and issues to be considered.

Solutions exist.

For example, if you are already living and working abroad ahead of retirement, why not look into whether a QROPS, offshore pension scheme, as backed by the British government could actually be a better bet for you.  These are schemes with many advantages such as the fact they can be in the currency you intend to take and spend your pension income in, they can prevent you from having to buy an annuity and limiting your income in retirement, and they can be tax advantageous too.

Alternatively, if such an arrangement is not suitable for you, what about saving a percentage of your income in a different currency even whilst you’re onshore, hedging your currency bets with the help of a specialist currency broker or even cashing in everything in the UK and moving all your income and assets overseas.  Some of these ideas could be best for you, some could be absolutely unwise…which is why a) you need to begin planning and preparing well in advance to learn what is and is not right for you and b) you need to take specialist financial advice in advance of a relocation to ensure your money is well protected for the long-term.

How to Retire Abroad Step 2

You need to have somewhere to live, but you don’t also want to rely on a property market’s underlying value and liquidity for your future financial success.  Look at those in Spain who relied on the fact that their homes would rise in value until one day they would perhaps need or want to sell them to turn their value into cash to spend on a care home, a home back in the UK, permanent healthcare or whatever.  These people are literally trapped in homes which have lost significant value and are just not wanted by would-be buyers.  It’s not okay for us to say, well, if they wait for the medium to long term the market will rebound and regain a great deal of strength, value and momentum when these people desperately need to sell out and get their money out today.

So, think of a property as a place to shelter you, don’t think of it as a place to store your wealth, don’t think of it as an appreciating asset and don’t think of it as a liquid asset.

How to Retire Abroad Step 3

Think very seriously about protecting your health and your care status over the LONG TERM!  Yes, you may very well be at the peak of health and fitness today – however, whilst we all firmly believe the ‘it will never happen to me’ philosophy otherwise we’d be emotional wrecks all the time, the fact of the matter is, when we age we increase our chances of falling ill or of our health/mobility/abilities dwindling in some way.

This is a reality you must accept if you’re going to successfully plan for a relocation abroad, particularly in retirement.  You absolutely have to look at worst case scenarios and cover yourself for them.  So, if you fall long term ill and need expensive long term care – can you pay for it?  If you need specialist care, is it available in the nation you’re moving to?  If you need home help or a carer can you get one?  How much will that cost?  If you want to return to the UK how will you fund that and the first 6 months of your return when you may not have access to NHS care for free.  What if your partner dies, how will you cope alone, what will you do in terms of care and support then?

You have to think about these awful potential realities in order to protect yourself should something terrible happen – to not think about it is irresponsible at best and fatal or at least horrendously awful at worst.

Options you need to think about include getting an appropriate health insurance policy in place today that will see you through for the rest of your life.  The older you get the fewer insurance policies there are available for you.  What’s more, think about critical illness and life insurance, think about setting money specifically aside for long-term care and get a will and letter of wishes drawn up today that will cover every potential scenario.  Chances are, the better protected and prepared you are the better the state of mind you will be in and the less likely you will be to fall ill!  Okay, so there are no guarantees – but you can and should and really must get everything in place to protect yourself and your loved ones too – after all, they will have to shoulder the burden of your care if no one else will step in to look after you…and that’s not a fair legacy.

How to Retire Abroad Step 4

We talk a very great deal on Shelter Offshore about saving and investing – and this conversational thread does not end when you reach retirement.  Ideally you will not be living hand to mouth in retirement – and you’re probably even less likely to be if you plan well in advance and perhaps make use of a suitable savings method for retirement that does not restrict you to having to buy an annuity with the majority of your pension fund for example.

Therefore, you still need to think about wealth enhancement and protection in retirement when you’re living on your pension income.  Perhaps your risk profile will significantly alter when you retire and are no longer earning a regular wage, perhaps your exposure wishes will alter as you look to shorter term holdings.  Maybe your tax position will change considerably allowing you to save and invest in different ways to take advantage of this fact.  All of these options and potential advantages need to be explored with the aid of a financial adviser who a) understands your position as an expat retiree and b) understands the world of opportunities specifically open and potentially advantageous to you.

How to Retire Abroad Step 5

And finally, the thread of this report has been about planning to move abroad in retirement – and there are so many elements of the planning that have to be understood and embraced.  From getting your pension income secure to enhancing any ongoing savings and investments you make, from getting insurances in place for your long term health care to realistically thinking about how you will financially survive abroad.  But aside from all of this you really need to think about what a retirement abroad will do for you, how it will benefit you and enhance your life.  You may be going in search of better weather more conducive to a good state of health, you may be looking to escape the pace or poor quality of life you currently experience.  Whatever your reasons are for moving abroad, make sure they are well explored and well understood by you, that they are realistically achievable and that you really do know what you’re getting yourself in to.

Living abroad in retirement is not holidaying overseas for two weeks of the year before returning to your normal 9 – 5!  You need to be realistic about what you will gain from moving abroad and then you need to do everything you can to make sure the move is a successful one that brings you great personal satisfaction, pleasure and joy on an ongoing basis.