A New Horizon – The Upside Of Downsizing For Retirement Overseas

As the UK’s baby boomers enjoy their retirement and Generation X begin to follow them, a significant shift is occurring in the housing market. Empty nesters are choosing to downsize and relocate abroad, seeking sunnier climates and a cheaper lifestyle.  This trend is not just financial savvy; it’s a move towards a new chapter of life filled with possibilities.

The overseas property experts at PropertyGuides.com suggest how embracing downsizing as “rightsizing” is key to making the change a happy one.

Christopher Nye, senior editor at Property Guides says: “Downsizing is a practical step for retirees, but it’s also an emotional journey. Leaving behind a family home rich with memories can be challenging. The key for downsizing is to see it as a new adventure, a way to make new memories. 

“The practical benefits of managing a smaller home are myriad, with smaller bills and easier to maintain. And this is your chance to get the exact property you want – not what you can afford near a school and close enough to work. Think of it as your grand design.” 

The team at Property Guides have pulled together their top tips for downsizing successfully: 

1. A fresh start

We all have our dreams in life but they are often stymied by circumstances and simply being too busy. Well, now’s your chance to live out your dream home fantasy! A place to paint or write, a yoga room, a better view, a greener garden, a pool… whatever you fancy. When planning your future home, focus your budget onto things that will allow you to enjoy some ‘you time’. 

2. Future planning 

Downsizing is an opportunity to simplify future estate matters, reducing the burden on loved ones. It’s also a proactive approach to decluttering and organising personal affairs, ensuring a smoother transition for family members down the line. Plan for the future, which might include adapting to living on one floor.

3. Financial savings

The timing of the move is crucial to maximise benefits and minimise tax implications. Experts recommend selling the primary UK residence before becoming tax residents in the new country to avoid potential capital gains tax liabilities. Aligning the move with the latter half of the year can further mitigate tax risks due to the common January-to-December tax year in many European countries.

4. The Mediterranean beckons

The dream of a beachside retirement is more attainable than ever. The Mediterranean coast from Cyprus to the Costa del Sol via Croatia offers excellent value for money. Will it be a beach home, a villa on a costa or an apartment on the Golden Mile? Either one can offer a saving on its UK equivalent, not just on the property but also on the living costs.

5. Beware of inheritance rules

Many countries overseas have systems of “forced heirship”, where instead of your assets simply passing to your partner, your kids inherit a fixed portion of your estate. With many older couples having children from previous relationships, this can get fearfully complicated, and the inheritance tax implications are huge. So, ensure you get the best legal advice on structuring the purchase and making a will. 

6. Don’t wait too long

Emotional as it can be to sell the family home, it’s considerably worse when you’re on your own. No-one likes to think about such things, but nothing lasts forever and downsizing as a couple means making happy new memories together, rather than when grieving the loss of a partner. 

As retirees embark on this transformative journey, the message is clear: downsizing is a gateway to a happier, more adventurous retirement.