Walking into the sunset
Tuesday September 19th 2006
Alexander Garrett
By 2012 one in eight British people over 55 will be living overseas, predicts the independent think-tank the Centre for Future Studies. The trend towards retirement on foreign soil has been under way for many years but has been picking up pace with the huge growth in opportunities for overseas property ownership. Already, one million British people draw their pension from overseas, according to the Department for Work and Pensions.
On a wet winter Wednesday in the British Isles, it is not hard to see why anybody might want to spend their retirement in the sunshine. But while it is tempting to think of retirement abroad as an extended summer holiday, a vast number of questions need to be answered before making such a bold step.
Choosing a country is probably the first decision, and most people will choose somewhere they already know and like. Alternatively, it may be a question of joining friends or family who have already moved abroad. In either case, Age Concern advises that you visit the country at different times of the year before making a decision ? to find out how you would cope with the changing climate. Age Concern?s Helen Wanless adds: ?Living in another country on a trial basis may help you to gain a better understanding of the lifestyle without giving up your home in the UK.?
Learning the language will help you settle in, to access services, join in with the local community and generally avoid becoming isolated, says Age Concern. On holiday, it is easy to get by with English, but once you need to start dealing with people such as doctors, dentists or tradesmen, it is essential to be able to communicate properly.
Property is often less expensive overseas, but before you buy it is vital that the location is right: a holiday development may be dead out of season; a rural farmhouse may be great for a week?s holiday but too isolated to live in all year round.
Financial planning is key to any move abroad. As well as working out your likely cost of living, you need to look at how your income sources ? pensions, investments, benefits and so on ? will be affected by the move.
You certainly need to find out what your tax situation is. The HM Revenue & Customs web page on the subject begins: ?Residence is a complex subject.? Under double-taxation treaties you shouldn?t pay tax twice, but avoiding the clutches of the UK taxman might be more difficult than you expect. Meanwhile, the Foreign and Commonwealth Office advises: ?You may want to seek independent tax advice and consider the benefits of offshore banking before you retire abroad.?
Benefits and healthcare are another tricky area. The Department of Work and Pensions booklet GL29 Going Abroad and Social Security Benefits explains: ?Some benefits can continue while you are abroad, some can continue for a certain period as long as your stay abroad is temporary, and some will stop straight away.?
With healthcare, similarly, Age Concern says: ?The UK has mutual healthcare agreements with many countries, but these may not cover all the expenses you can incur. These may not entitle you to free treatment but only to reduced cost treatment.?
All in all, there is a lot more to retiring abroad than buying a house. And for many, the dream of retirement turns sour, as Wanless of Age Concern explains: ?Different customs and the strain of being away from family and friends are common complaints that result in an estimated half of expatriates in Spain returning to the UK.?
Click on the links below to see what the six of the most popular retirement destinations have to offer.
Retiring in style: Spain
Money Observer
www.moneyobserver.com
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