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Retirement Guide

Introduction

Retiring abroad or remaining in the UK?

The whole picture of retirement has changed. At one time, most people thought of this period of their lives as a question of downsizing their property by selling off their family home and either moving into a small flat or bungalow, or moving into a retirement complex. All of this would have been within the UK. In many cases today, couples are selling the family home (or taking out an Equity Release – see ‘money’ section) once the children have left, and they then invest in a home abroad to which they retire.

The alternative for a growing number is to use part of the funds raised from their main home by purchasing a small property abroad (and become what is known as ‘residential tourists’ - this means that they travel without much luggage and spend extended periods in their overseas home) and then use the balance of the funds to buy either a much smaller independent property in the UK or a house or apartment on a complex.

Generally the latter is very much a ‘lock up and leave’ investment and, should the time come when there is a need to move into a more controlled environment because of health, then the UK property can become the main residence and the overseas home can be sold or rented out to provide the necessary funds.

At this stage, it’s important to define what retirement means and this depends very much on the individual’s circumstances, age and general state of health. The world is now open to couples who are thinking about retirement and looking for a home in the sun. But it’s also worth thinking about what happens if they decide to return to the UK (will they be able to climb back on the UK property ladder?), if one of the couple dies or if the property/pensions/income fails to keep up with inflation. There have been cases of people stranded abroad with homes they can’t maintain, with ever-diminishing incomes and, in some cases, completely on their own.

For those who purchase a property when they are much younger, say 50 or 60 years old, such problems are surmountable. But once someone reaches 70 plus years old, things can become that much more difficult. And that is why in-depth research is so essential before making any move abroad.

Retiring abroad needs forethought

Probably the four most important factors for anyone thinking of going abroad for retirement are:

• Don’t be starry eyed about the move. It’s essential to remain clear-sighted and to take a cold, hard look at what is probably the biggest upheaval in anyone’s life at any age.

• It can be the most marvellous life-improving experience but it’s no use avoiding the fact that there are hard decisions and choices to be made. Avoiding careful thought and not making those choices will guarantee problems in the future.

• Unless the chosen country is English-speaking, there’s the question of learning a new language. Some people take to it like the proverbial duck to water, regarding learning a new language as a fun challenge. Those are the people who never mind making fools of themselves. Others can never get the heads round it. But it’s worth remembering, most people accept a stranger far better if they have a mutual language. There’s also the question of dealing with day-to-day activities such as going to the doctor, opening a bank account, understanding enough to deal with the plumber or electrician and being able to answer the phone in a new language.

• Buying a home abroad costs more than just the purchase price. Don’t forget:

• Legal expenses (depending on which country, there are notary fees, stamp duty, registration fees and local taxes) as well as the cost of a solicitor (and possibly a surveyor, although this is less common in most countries outside the UK)

• The cost a making a new Will. If you die without making a Will while you are living abroad, it can cause major problems for your heirs. The best thing to do is to seek professional legal advice

• The cost of removals from the UK to a new country (these can be quite expensive). Get at least three quotes from different companies. Also ensure the chosen company is part of an industry organisation

• The cost of purchasing a new car (sorting out the insurance may well mean speaking the new language).

• The possible expense of buying a new dishwasher/fridge freezer/oven (those brought with the rest of the removals may not work abroad)

Making a start

The first question that needs answering is: why move abroad? Think carefully about the answers. The most common reply to this is: to find a better/warmer/healthier climate. The World Health Organisation has nominated Spain’s Costa Blanca as one of the healthiest places to live – could your health be the reason for leaving the UK?

Have relatives moved abroad and if so is it simply a question of being near to them? Would moving abroad be a financial advantage? (The introduction of the euro caused prices to rise throughout the various countries that adopted the new currency. They were rounded up rather than down!)

Certainly one of the biggest mistakes anyone can make is to move to a country they’ve never visited. Having chosen a destination, it’s important to take several holidays in the region to begin the process of getting to know it, to enjoy the lifestyle, to feel whether it is possible to spend time there without work and therefore with the possibility of being bored.

If you are in any doubt about whether you should make such a sea change in your life, let alone after 50, one possible answer is to let out your usual home/property in the UK. You can then use the income to fund a trial period living in a rental property in your chosen area. This makes it possible to check up on local services and it helps to lessen the shock of making a major move. It also provides the time necessary to seek out the ideal property, rather than being rushed into making a decision.

Don’t forget to talk to others who have already made the move during the period of renting a property. There are plenty of expat groups who are always happy to welcome a newcomer. They’ll be a wonderful source of information and obviously they’ve been there and done it. Expat groups can be found on-line. Follow this advice and you’ll be able to avoid making awful mistakes.

Where to go?

Currently there are 52 countries around the world that are attracting the attention of property purchasers. However, of these there are a number that would probably be unsuitable for anyone thinking of retirement. Thanks to the upward spiral of UK property prices, for many people the age of retirement has edged lower in recent years and quite a few are giving up regular work at 55. Obviously they would be young enough to move to more exotic destinations such as Egypt or Panama and should they find they’d made a mistake, there would still be time to move elsewhere.

But for anyone of more than 70 years old or who has a medical condition, it would be more sensible to consider other countries such as Italy, France, Portugal or Florida. At present, there are 25 member countries of the European Union with others waiting in the wings. Again, however, it is unlikely that living in, for example, the Czech Republic, Poland or Lithuania would be ideal for most retirees given the complexities of language and the differences in lifestyle.

More pages

Page 1: Introduction
Page 2: Retiring to an EU country
Page 3: Portugal
Page 4: Equity release

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