Are you thinking about retiring? Is it time to put down your tools and enjoy a little bit of relaxation? Thousands of people living in the UK dream about retiring abroad and escaping the dreary British weather for somewhere a bit sunnier.
If you are based in the United Kingdom and you want to retire abroad you may be wondering how retirement will work for you. Is it simple? These things rarely are. In fact there are a number of things you need to consider before making any decisions.
In this blog we’ll be exploring everything you need to know about the process of retiring abroad from the UK, including:
- Choosing your destination
- Understanding your retirement finances
- Selling your home in the UK
- UK State Pension when retiring abroad
- Send money home
Choosing your destination
Before you start delving into the administrative stuff it’s time to let yourself dream a little. Where do you want to retire? Where can you imagine yourself living after a lifetime of work? You’ve probably already got an idea in mind but now is the time to start really thinking about your ideal destination.
From a logistical standpoint choosing the best place to retire abroad will also affect your retirement process. For example, retiring in France is a lot different to retiring in Australia or Thailand.
Wherever you retire you will be obliged to tell the UK government of your intentions. This is an important step in the retirement process. Once the government and your local government know your intentions to permanently leave the UK then you can start putting things in motion.
As well as informing the government of your intentions, there are a number of other factors to consider when choosing your ideal location including your finances, your health, your loved ones and your personal aspirations for the future.
Understanding your retirement finances
Money is one of the key considerations you have when retiring. Do you have a suitable amount of savings and a good enough pension to pursue your dreams of retiring to a villa by the beach? This is a very personal part of the retirement process and everyone will be in different circumstances.
When you retire you can truly gain financial independence. You will have a guaranteed income without having to work. For many retirees this will be about pensions, property portfolios and other forms of savings. If you want to enjoy your retirement years then you will need to start thinking about your finances right now. Understanding where your finances are coming from and how they might fluctuate
Additionally, if you are getting your income from the UK then you will need to consider exchange rates to the country you plan on retiring to.
Managing your home in the UK
Before you head abroad to enjoy your retirement you’ll have to think about what to do with your property in the UK. Do you sell it or keep it? This is an important element of retirement and it will depend on how you want to spend your years.
Do you want to completely cut ties in the UK and never return? Or do you want to spend half the year in the UK and half the year abroad? These kinds of considerations will impact the way you manage your home in the UK.
In the past ten years many retired UK expats have found, after selling their home in the UK, that the state pension was not enough to keep them going during their retirement abroad. However, when they tried to move back home again they found they would no longer be able to afford to buy or even rent a house in the UK.
The rise in house prices in the UK compared to the level of increase abroad has forced many retirees to make difficult decisions. We recommend getting advice from some experts about the management of your property before you retire abroad. Ideally you’d want to do this a few years before you actually retire so that you can have everything in place before you move and you can limit the hassle.
The UK State pension when retiring abroad
The UK state pension will be an important part of how the process of retiring abroad goes for you. If you were born before 6 April 1951 (for men) or if you were born before 6 April 1953 (for women) you will be eligible for the basic State pension. If you were born after this date then you will be eligible to claim the new State pension. To learn more about these age range brackets visit Gov.uk/new-state-pension.
Whenever you are born, if you meet the qualification criteria by paying your National Insurance Contributions you will be able to receive a state pension. This should allow you to start planning for your retirement years.
The State pension can be paid into a UK bank account or into a foreign bank account. However, you will need to inform the International Pension Centre that you are leaving the country to retire and you have to let them know of any changes in your circumstances.
If you retire to a country that has a social security arrangement with the UK, your state pension payments may increase over time. However, if you plan on retiring to countries like Australia or Canada your state pension payment will be frozen once you begin to claim it. This will mean that its value will not increase unless you return to the UK on a permanent basis or meet some other criteria.
Before you retire it is worth investigating the social security agreements the UK has with countries around the world and seeing how they match up with your ideal retirement destination.
Small World can help you
Small World’s money transfer service can help make your retirement plan a simple and seamless process. We provide money transfer services to hundreds of countries all over the world.
You may want to support your loved ones who might already live abroad, or receive money yourself once you’ve arrived. Either way you can use Small World to ensure that your money is transferred and stored safely and easily. We hope you enjoy your retirement and the years of rest and relaxation!
Your first digital transaction is always free of transfer fees!