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Things to consider when choosing where to retire abroad

Holly Thomas / 06 August 2014 ( 11 October 2018 )

Choosing where to retire overseas takes a lot of consideration – the things which make a good holiday destination are different from the practical things you need for everyday life. Holly Thomas shares four things you need to think about when choosing where you'd like to retire.

Sunset on a beach
The reality of fully emigrating can be very different from carefree times on holiday

Of the estimated 3.2 million UK adults planning to retire in Europe, a quarter want to move to Spain, followed by 17% heading closer to home choosing France. Italy comes in third place with a 10% popularity rating.

The other half want to head further afield, with the United States ranked as the most popular destination, gaining 16% of votes. The remainder favoured Australia and the Far East.

Choosing a destination is an important task. Thoughts of better weather, cheaper living costs and potentially cheaper property than the UK can be a strong draw. 

But thinking that your regular holiday destination can also be your ideal retirement home is a decision that might be riddled with flaws.

The things you think about as right for a holiday destination are very different from the practicalities of the things needed for everyday life.

Without the right planning, savings and advice, you can quickly get caught out by local tax laws, exchange rates and other financial arrangements, turning a retirement dream into a potential nightmare.

Here are some important considerations:

1. Pensions

The country you choose to live in could affect your state pension pay out. Countries in the European Economic Area (EEA), benefit from an agreement that means your state pension will rise with inflation.

But those outside, or countries that don’t have a reciprocal agreement with the UK, don't grant state pension increases to people who have retired there.

These countries include Australia, New Zealand, Canada and South Africa – all appealing destinations for retirees looking for better weather and potential cheaper property than the UK.

The UK full basic state pension for a single person was worth £79.60 in 2004. From April 2018, it is now worth £164.35 a week, an increase of more than 106%.

If the country you’re retiring to has a reciprocal agreement in place with the UK, then the UK state pension will be paid and increase as normal.

But where there is no agreement, and that includes Australia and Canada, your state pension will be frozen and won’t increase.

Read our moving abroad money checklist.

So if you retired to Canada 14 years ago, your UK state pension would now be worth 106% less than if you had retired across the border in the US. 

Or put another way, your pension would be worth £4,407 more a year by simply choosing the US as a retirement destination rather than Canada.

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2. Property

Spain remains attractive in terms of property prices thanks to continued depressed prices. Mark Bodega at currency specialist HiFX said: "Spain continues to attract Brits who are hoping to take advantage of depressed property prices. 

"The average property price in the country is down almost 30% since the market peaked in 2007, and while there are discounts to be had buyers need to pick carefully. 

"The macroeconomic outlook remains poor, and because of this, we are unlikely to see any further stabilisation in the current housing market.

"Affordability in France has also been boosted by a slower property market as worries remain that France may well be lagging the rest of the Eurozone in terms of economic growth."

When buying abroad, get specialist advice from independent solicitors, architects and surveyors who should be proficient in your chosen country's laws and processes and also know the specifics involved in buying a property there.

When costing out your purchase, remember that bills do not end at the asking price. Lawyers' fees, taxes and insurance must all be met and can often be forgotten expenses.

Exchange rates are also an important consideration. If you agree to buy an overseas property without fixing the exchange rate at the outset, that's exactly the gamble you’ll be taking. 

Forward contracts enable you to lock in the exchange rate for up to 12 months and are available from many currency specialists.

Find out how to safeguard your UK home while you are living abroad. 

3. Healthcare

Check the cost of healthcare in the country you are thinking of moving to. In theory, pensioners living in EU countries such as Spain and France receive free healthcare.

But it might be worth buying private medical cover if you want to make sure you receive the best care possible. Policies abroad are often cheaper than in the UK, but it might be better to buy a UK policy that offers consumer protection from the regulator, the Financial Conduct Authority, in the event that something goes wrong. 

4. Tax

Tell HM Revenue & Customs that you are moving overseas. This allows them to let you know of any UK tax liability you may have, even though you are living overseas. 

And, more importantly, can allow any UK pension you have to be paid with no tax deducted and taxed in your country of residence – if the country you live in has a double taxation agreement with the UK.

Read our tips for buying property abroad. 

Helpful websites

You can get an estimate of your state pension at

Check the relative cost of living at numbeo

For practical information on living abroad, look at

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The opinions expressed are those of the author and are not held by Saga unless specifically stated. The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.