expat network

Top Ten Issues When Deciding Where To Retire Abroad

where to retire
Many of us have a clear idea of where we would like to retire, but there are many factors to consider.  You may have had many happy holidays in one part of the world, but that does not necessarily mean it is the best place to spend your retirement.  Costs, taxes, environment, community and what it is like out of season are all points that can determine whether your retirement meets your expectations.

Here are our top ten issues to consider when deciding where to retire:


1. Climate

Climate is one of the key factors in deciding where to retire.  Many living in the northern states in the US retire to Florida and Arizona or when moving out of the US they often choose Central America or the Caribbean.  British expats tend to move to Europe with Spain the overwhelming favourite.  A few more adventurous souls venture further afield to places like Thailand or join Americans in the Caribbean.


2. Lifestyle

Sunshine is not the only consideration when choosing your retirement destination.  The lifestyle that you will lead should be one of the most important draws.

How will you spend your time and what are your main enjoyments in life?  Are you looking for an active outdoor lifestyle trekking across countryside and mountains or lying on the beach, perfecting your windsurfing or taking out your yacht for a day’s sailing or fishing?  Or are you more interested in the cultural life with theatres, museums and art galleries?  Are you drawn to rock, pop or classical concerts or spend time in jazz clubs?  How easy will these be to access from your chosen location for your retirement?

Most of us we look for a combination of these things and so a home in the countryside with a short trip to the coast and not too far from a local city could be ideal.

Golf, tennis, sailing, fishing, cycling play an important part in many people’s lives and can be a great way to meet people as you settle in to retirement.  How close will you be to places you can enjoy these pastimes and what are the costs and how easy is it to join clubs to pursue your interest?


3. Expat Community

Being able to enjoy your retirement with like-minded people can be an important consideration for many.  In Mexico there are communities where there are many American and Canadian and a few European expats and In Spain there are many areas where there are large expat populations, particularly Brits and Scandinavians.

You should consider whether you want to be close to other expats or to integrate more actively with local people.  In some parts of Spain British expats are so dominant that most of the bars and restaurants are run by Brits.  If you are looking for a more authentic Spanish experience you may want to find somewhere with a better balance.


4. Accessibility

Accessibility is another issue to consider so that friends and family can visit easily and you can get home to see friends and family for a catch up or when an emergency arises.  In today’s shrinking world we can get back from any part of the world, but there are still costs and timing that should be considered.  Children and grandchildren may be attracted to your new home for holidays, but if the cost is too high their visits may be less frequent than you would like.


5. Property

The type of property that will best suit your needs is a very personal decision.  An apartment overlooking the sea, a villa with a pool or a farmhouse deep in the country.  Whatever your preference will be a factor in deciding where to live.

There are pros and cons for renting or buying your home abroad (see Property Options When Retiring Abroad).  The availability of each option will vary from country to country and region to region.  For instance, in the coastal resorts of Spain there are many options to purchase property but there can be a limited supply of properties available for long term rental as most owners look to rent the property for short summer vacation lets and only release their property for longer terms leases over the Winter.

Even if you decide that buying a property is the most attractive  option we strongly recommend that you start by renting for at least six to twelve months so that you confirm that the life and the location works for you and get to know the area and the local market so that you are clear on your options before committing to a property.

You should also be aware of potential restrictions on foreigners purchasing property in some markets.


6. Healthcare

As you plan for your retirement you have to face up to the fact that you will not necessarily avoid health problems and so access to good quality healthcare is vital.  This can be achieved by having access to the state healthcare system or by relying on private healthcare (see Accessing Healthcare When You Retire Abroad).  You will need to check whether you have access to the state system and on what terms and look at your options for private health insurance.

Even if you have access to the state system there are often advantages in having private medical insurance as it can give access to better care more quickly if the need arises.


7. Cost of Living

For most of us the cost of living is a key consideration as we begin retirement.  It may not be the determining factor, but is inevitably to be considered.

The everyday cost of living will depend on your lifestyle and you should always be realistic about the lifestyle you will want to lead in a very different environment rather than looking at the cost that you would have incurred at home.  You may find yourself spending far more time out and about in a country with longer periods of sunshine so may also find yourself eating out more than you do currently.  The cost of doing so is often lower in countries where eating out is more common.  You will often need to find options outside the main tourist areas.

Major items like housing and healthcare can be significant part of the costs.  Property in many parts of Europe can be cheaper than in the UK but matching your expectations to your means will be key to ensuring that you do not commit yourself to a higher cost than necessary.  Healthcare costs will depend on whether you are able to access the state health system and can vary significantly from country to country.


8. Tax and Inheritance

There are many issues that you will face in terms of tax and inheritance when you move abroad.  It is worth taking advice to ensure you understand your options for receiving your income subject to as little tax as possible.

When leaving the UK, the Statutory Residence Test determines whether you remain resident for UK tax purposes.  The residence rules for each country is different and it can be possible to remain resident for tax purposes in the UK as well as in your new home country.  The Double Tax treaty should ensure you do not pay double the tax you may end up paying more tax than you need to.

In Spain for instance you become taxable on your worldwide income once resident. Thus if you have rental income from a UK property it will remain subject to UK tax, but also in Spain.  The tax paid in the UK can be offset against the Spanish tax, but it is taxable.

In Portugal on the other hand the same rules apply with your income being subject to Portuguese tax when you become resident in Portugal, but the Non-Habitual Resident tax regime means that when you first become resident you can receive foreign income such as overseas pension income tax free in Portugal for ten years. If you are non-resident in the UK you will not pay tax there either.

There are often taxes that sound like UK taxes, but may be calculated completely differently.  There are also taxes like wealth tax in France or Spain that are not part of the UK tax system.  It is important to understand these differences when assessing the financial position you will face as part of your decision of where to retire and also to take advice before you move to ensure that you structure your affairs efficiently.

Inheritance is another issue that needs to be fully understood as the rules can be fundamentally different.  Depending on your situation you will need to consider your will in both the UK and in your retirement home.  French inheritance law as an example dictates how your French estate is shared between your heirs.  Inheritance or succession tax rules vary from country to country and so it important ensure you take advice to ensure your will has the effect that you intend and that you do not incur unnecessary inheritance tax.


9. Environment

Living in or close to the country, the mountains or the coast can have a really positive effect on your lifestyle in retirement.  Walking, cycling or jogging in the fresh air or enjoying the sea air has to have a positive impact on your sense of well-being.  Even if you choose city life having access to parks and the river is worth considering when you choose where to live.

With an increasing number of cities suffering problems with pollution the environment in the country and the region you choose is an important consideration from the perspective of its impact both on your enjoyment and your health.


10. Crime and Safety

Nobody deliberately chooses to move to a high crime area and everyone wants to fee safe.  There are no places at home or abroad that are totally crime-free.  For most there is a level of petty crime, but few of the popular retirement locations have major problems with crime.  It is, however, worth checking the crime statistics, but the normal precautions you take normally is generally all that is required.