You might fancy the idea of retiring abroad, outside the UK, however, it would be best if you understand the economic and financial implications before making that decision. It is unrealistic to think that there wouldn’t be a financial impact associated with retirement outside the UK.
That being said, what are the critical aspects to be aware of when retiring abroad? This article highlights the tips to choosing the right location for retirement abroad and the financial impact you should expect with such a move.
Retiring Abroad: Living outside the UK
There is so much information online that can easily give you the idea of your dream retirement country. However, picking the best retirement location outside the UK is more about understanding the country’s regulations than the country itself. Certain factors can generally make or break your dream of retiring abroad. The following are some of the most crucial factors when selecting your retirement country:
- Notifying the UK government of your intentions to relocate permanently to another country is imperative. You might not be able to access your pension payments without that.
- You will have to give personal details such as evidence of your ability to financially support yourself in retirement, as well as a health statement. The information will allow the government to process and grant you a permanent visa much faster.
Effects of Currency Fluctuations on Pension Income
Retirement is typically the point in your life where you get to receive income in the form of a pension or investments without working. Making an effective plan to manage your income can significantly improve the retirement experience.
However, if you plan on retiring abroad from the UK, you have additional risk factors to consider. One of the main concerns is currency fluctuation between the destination country and the UK. It is essential to bear in mind that you’ll receive a pension in the UK in pounds. That’s when currency exchange and exchange rates come into play. These things will determine how much purchasing power you’ll have in your destination country.
Sometimes, currency fluctuations may lead to an unavoidable drop in disposable income on the other end. For instance, the Euro and Pounds Sterling had an almost equal value on the currency exchange market. That means you would have slightly lower spending power if you retired to a European country at the time.
However, the situation changed with the recent devaluation of the Euro, and it benefits people in the UK seeking to retire permanently in Europe. Overall, if you will be retiring elsewhere, consider the current currency exchange rates, as it gives you an idea if you can sustain your living as you would in the UK.
Final Thoughts
In reality, retiring abroad from the UK isn’t too different from temporarily moving abroad, and the distinction is that there are significantly more factors to consider. Some of them are fundamental, as mentioned in the paragraphs above. Others might be more complex, as in the case of pension taxation and income withdrawals.
To learn more about pension taxation matters and how best to manage your pension income, contact us.