British retirees are among the worst off in Western Europe for a number of key reasons. Annuity rates for pensioners in the UK are terrible at the moment for example, and this is having a real impact on any pension income an individual can earn. Added to this is the fact that the government is slashing benefits and support for everyone, including pensioners.
Other reasons why Britons are worse off in retirement include the fact that the British stock market - in which most people’s pensions are invested - has faired badly over the past decade, and British retirees also have to contend with the weather in the UK which is generally rubbish too!
If you then add inflation to the mix, as well as concerns about everything from immigration to underfunding in the NHS, you can easily see why British retirees are worse off than their counterparts in the rest of Europe. But as we will show you today, if you want to avoid penury in retirement you can move abroad, take your pension offshore and profit to the max on a number of key levels. If you take the expatriate approach and retire abroad, you can potentially be financially, emotionally, spiritually and physically better off…
Most invested pensions are linked to the FTSE 100 during their years of supposed growth and development – however, over the past decade the path of the footsie has been quite a negative and wobbly one to say the least! Many people have not enjoyed the gains that they would therefore have liked, and are now looking into their pension pot and seeing that it’s much emptier than they would have expected at this point in their life.
If you’re fast approaching retirement this will be of obvious concern. It will mean that you have a lot less to secure your retirement income with.
An onshore pension has to be used to buy an annuity to facilitate retirement income, and herein lies the next problem…annuity rates on offer in the UK at the moment are poor.
Anyone retiring is of course advised to shop around and compare rates from all providers, but this may only get you a percentage point’s difference at best.
Inflation is riding high in Britain - (although economists will say that relative to 10 years ago for example, inflation is not riding that high) – and it comes on top of higher direct and stealth taxes and an almost bankrupt economy that we’re all desperately trying to bail out.
Retirees are therefore being squeezed from all angles, fiscally speaking…and there is NO positive news on the horizon if they remain living in the UK. Public spending cuts will have an impact on all our lives, immigration policy is still not fair or balanced enough for most people’s satisfaction, support and social assistance is being slashed, and the quality of life available in the UK is dwindling almost as fast as the economy!
All of this is wholly negative – BUT, fear not, because there are very real ways that you can avoid all of this doom and gloom simply by moving abroad.
How can a move overseas really help?
Well, from a purely financial perspective, relocation overseas in retirement can benefit you in a number of key ways.
If you haven’t already bought an annuity or drawn down on your pension and it is still invested and intact, worth over £60,000 and you want to retire and live abroad for at least 5 years, you can take your pension pot offshore with you and potentially see it invested more appropriately for your needs and goals thanks to a solution called QROPS.
QROPS stands for qualifying recognised overseas pension scheme, and these are British government and HMRC backed schemes suitable for many expats and those who want to retire abroad.
They are pensions with which you are under no obligation to buy an annuity! This means you can draw an income from your invested wealth in a way that suits you more, you can invest in different ways and across different underlyings, asset classes and even currencies and protect your pension lump sum to the max – all according to your own risk profile for example.
It also means that any unspent money you have and from which you’re earning your retirement income, can be left to your beneficiaries upon your death, so no longer will your life’s hard work have to die with you as it does if you buy an annuity in the UK.
As I am sure you can see, these schemes are incredibly exciting – however, they are not necessarily right for everyone and you have to have expert, qualified advice to ensure that you take the right steps for your monetary health. Ensure you speak to an independent adviser who is regulated, qualified, and expert in advising expats and would-be expats about their pension and retirement options.
Having secured your retirement wealth accordingly, you can now benefit from living abroad in retirement thanks to the fact that some nation’s tax you far less too. For example, if you retire to Cyprus you may only have to pay 5% income tax on your pension, or if you take advantage of the many retired persons incentive schemes in operation in developing countries, you may qualify for tax-free living abroad.
Added to these benefits in many nations is the fact that the cost of living abroad can be much less. If you move to a nation where the weather is better than in the UK for example (hard to find a country with worse weather!!) you may not have to pay heating costs, and this can save you a small fortune each year. Other countries have lower grocery and fuel costs…and if you ‘shop around’ for the right nation, you may be able to slash your cost of living and your tax, and still enjoy enhanced pension benefits by investing in a QROPS.
With greater wealth to enjoy retirement with, chances are you will feel less pressure and less stress, you will therefore be able to enjoy life more, and when you add this to the fact you could be living in a sunny nation where the pace of life is laid back and where the people are welcoming, you can easily see how retiring abroad could be very good for you indeed!