Brexit concerns outweigh Covid-19 for those planning to retire abroad

• Almost half of over 50s planning on retiring abroad are reconsidering because of Brexit

With the risk of a second wave of Coronavirus looming, research¹ from Canada Life today reveals that Brexit concerns still outweigh those surrounding COVID-19 for those looking to retire abroad. 

Almost half (46%) of over 50s who are planning on moving abroad when they retire are reconsidering where they might retire to, due to Brexit, with a further 44% claiming the uncertainty is making them reconsider their plans altogether. When it comes to COVID-19 concerns, these figures are 39% and 37% respectively. 

Retiring abroad has long been a popular option, as Brits go in search of better weather (68%), a more desirable lifestyle (63%), higher standard of living (46%) and cheaper living costs (45%). For the eighth year running, Spain tops the charts again. Despite current travel restrictions, the top ten locations remain the same as last year, with both New Zealand and the Far East growing in popularity, and the top five not moving at all. 

With many retirees considering moving abroad for a cheaper standard of living, the average monthly income needed is thought to be £1,404 - £378 less than the UK. This varies by country, with those hoping to retire in France thinking they will need the most at £1,562 per month, followed by Italy (£1,541). Unsurprisingly, retiring in the UK is thought to be more expensive with an average monthly income of £1,782 required, increasing to £2,201 for those in London. 

For those considering retiring abroad, it’s important to consider the impact of reciprocal social security agreements. Countries in the EU - as well as many others - have these agreements with the UK, which means the State Pension will increase each year in the same way as retirees living in the UK - but it’s important to understand whether the agreements are in place further afield².

The research revealed, however, that just a quarter (25%) of those planning to head abroad know which countries had reciprocal payment agreements in place, and one in five (20%) did not even know such agreements existed. 

Andrew Tully, Technical Director, Canada Life said: 

“Whether in search of better weather, a more desirable lifestyle, or cheaper standards of living, retiring abroad remains a popular option for the over-50s. However, with COVID-19 dominating the global news agenda this year and a second wave anticipated, it’s surprising that Brexit concerns come out on top and could indicate that longer term legislative fears are greater than shorter-term health and safety for soon-to-be retirees. 

“When retiring abroad, there are a number of key considerations, such as which countries offer reciprocal payment agreements, currency exchange rates and whether State Pensions will keep pace with the cost of any living increases. To help navigate the complexities around retiring abroad, it’s important to seek professional advice. This could make all the difference between living the retirement people have worked long and hard for, or falling victim to the potential retirement risks.”

Top tips for retiring abroad

1. Get an estimate of your state pension here. 
2. Seek independent financial advice before you move – to find an adviser go to unbiased.co.uk – you can search for experts on expatriate finance
3. Tell HM Revenue and 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 planning to live overseas. And more importantly can allow any UK pension you have to be paid gross (no tax deducted) and taxed in your country of residence (only applies if the country you live in has a double taxation agreement with the UK).
4. Check what reciprocal social security agreements are in place with the destination country regarding your UK state pension [including whether it will be increased or frozen] and other benefits
5. Find out about your welfare rights while abroad
6. Keep an eye on exchange rates as state pension and other income is likely to be paid to you in pounds and you will then need to convert to the local currency which may mean your income fluctuates
7. Check the cost of healthcare in the country you are thinking of moving to, and consider some form of medical insurance
8. If you decide to keep your property in the UK you will need to let your mortgage provider and insurance company know if it will be rented or remain empty
9. Do your homework on the cost of living in the country you want to move to
10. Notify utility companies, financial institutions and your local council when you are leaving
11. Contact the electoral register, and arrange for mail forwarding via the Post Office
12. If you plan to keep an account at your UK bank, contact it and ask if you will face any new rules or restrictions after moving abroad