This article is for general guidance only and is not financial or professional advice. It contains promotional content and links to financial products. All figures and information in this article are correct at the time of publishing. Laws, entitlements, tax treatments and allowances may change in the future. Before you make any decisions, you should get independent professional advice.
Rising living costs are putting pressure on fixed retirement incomes, prompting many over-50s to reconsider how – and where – they live.
Rather than simply downsizing, many retirees could reduce the cost of living by moving to a cheaper location, either within the UK or abroad.
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Downsizing is a common way for retirees to free up cash and cut costs, but staying in the same expensive area may limit the financial benefit. Moving somewhere cheaper can have a bigger impact – releasing equity and lowering housing costs, but potentially staying in the same sized home.
Reduced day-to-day spending, from groceries to leisure activities, can further ease pressure on income. Over time, these savings add up, helping pensions stretch further and improving overall financial security.
London and the South East are generally the most expensive regions in the UK, while the North of England, Wales, and Scotland are cheaper.
According to a ONS housing affordability survey in 2025, Hyndburn in Lancashire and Kingston-upon-Hull in East Yorkshire are the most affordable places to live in England and Wales.
A study by Investing Insiders also identified Hull, along with Burnley, Hartlepool, Blaenau Gwent and Neath Port Talbot, as among the most affordable towns for living costs, while the most expensive areas were all located in London.
Affordability studies typically compare housing costs with wages, but some use simpler indicators like the price of a pint. According to Finder, in 2025 a pint averaged £6.83 in London, and more than £6 in Brighton, Bath and Winchester. This compares to about £4 or less in places such as Wrexham, Newport, Dundee, Hull and Bradford.
If you’re considering a move, tools such as RetirementCalculators.co.uk can help you weigh up the costs of staying put versus relocating within the UK, taking into account housing expenses, day-to-day living costs and any equity you might release.
Utility bills can also vary significantly by region. Analysis from Quote Goat highlights that Northern Scotland tends to have the highest electricity prices (and coldest weather), while areas such as the East Midlands, the East of England and Yorkshire are generally cheaper.
Water charges differ depending on your supplier, which is determined by where you live. Providers like Severn Trent and Hafren Dyfrdwy currently have relatively lower bills, whereas South West Water and Wessex Water are pricier. Water bills in Scotland are generally lower. A sensible step is to check your postcode and compare expected bills using Discover Water data.
Council tax varies significantly around the country. The lowest bills are in Wandsworth and Westminster, which are otherwise relatively expensive, but many parts of Scotland also have lower tax bills. You can compare rates at PropertyData.
Driving costs vary significantly by area. Car insurance is heavily postcode-based, and expenses like parking permits, fuel use and vehicle wear can all add up depending on where you live. In areas with limited public transport, higher reliance on driving means more spending on fuel, maintenance and overall motoring costs.
Moving within the UK can mean losing local support, from trusted tradespeople to community connections. Many people relocate to live closer to family, but there will still be the emotional impact of leaving friends behind.
Even simple tasks like finding new bus routes or a decent supermarket take time, and the loss of familiarity can feel heavier than the financial hit.
Foote says: “Access is another risk. GP and dental availability varies widely, and rebuilding continuity of care can take time. If family and informal support networks are further away, paid support, taxis and overnight stays can become a real budget line.”
Don’t forget to factor in the costs of relocating, which can be significant, from removal costs to the cost of buying and selling.
The term “geo-arbitrage” is used to describe earning or receiving income in a stronger currency (such as pounds sterling) while living in a country with a lower cost of living and, perhaps, better weather (such as parts of south-east Asia). The concept of geo-arbitrage is simple – but there is a lot to think about to make it work.
Tony Redondo, founder at Cosmos Currency Exchange, says: “Overseas, a pound sterling pension stretches further in hubs like Portugal, Bulgaria or Vietnam, but currency risk is real. A weak pound erodes purchasing power fast.”
As well as currency fluctuations, there is also the cost of trips back to the UK to consider. The Middle East conflict shows how the cost of air travel can suddenly shoot up.
Jamie Alexander, mortgage director at Alexander Southwell Mortgages, says: “State pension rules are another long-term issue, since uprating is not universal abroad and a frozen pension can steadily erode purchasing power.
The UK’s triple lock ensures the state pension rises each year by the highest of inflation, average earnings growth or 2.5%. You’ll get this increase if you live in the EEA, Switzerland and certain treaty countries. But if you move abroad to many countries – including Canada, Australia and New Zealand – state pension payments are frozen at the rate first received, with no future increases.
Alexander adds: “Tax planning matters as well, because pension drawdown, occupational pensions and any UK rental income can be taxed differently depending on treaties and local rules, so specialist tax advice is usually needed before changing residency.”
Healthcare can be another decisive downside. In some places you may need comprehensive private insurance, which can become expensive with age and may have exclusions or limits.
Even with accessible state healthcare, language, bureaucracy, visas, income thresholds and tax rules – including non-resident landlord obligations if you still own a UK property – can make living abroad complex. Selling a UK home can simplify things and fund the move, but it removes a safety net if you need to return quickly.
Redondo says: “Practically, rent before buying, learn the language to avoid isolation, and keep a UK property as a toehold for healthcare and family visits. Done carefully, relocation can transform retirement finances, but the risks are as significant as the rewards.”
Relocating to a more affordable area can seem an effective way to strengthen your finances in retirement, but it’s often wise to approach it as both a financial decision and a lifestyle change. Testing the move by renting for an extended period can help you understand what the cost of living – and lifestyle – really looks like.
You should also consider whether other alternatives would work better for you, such as downsizing or equity release.
The key is to weigh up the savings and the lifestyle changes, and make a move that works for both your finances and your future.
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