Some of us have had enough of the great British climate by the time we come to retire. Spending that retirement by the pool in a place of our own in somewhere like Spain or even further afield has become something many aspire to.
It could be in reach. Lower property costs and a potentially lower cost of living, as well as a welcoming climate and a thriving expat community could make it practical proposition.
But has Brexit put an end to a retirement in the sun? At Continuum, we are looking whether a fresh look at your retirement plans may be necessary.
The great migration
Back in the 1990s and 2000s, many retired people headed for the sun. Figures grew from about 4.1 million in 1990 to 5.5 million back in 2017 as housing equity windfalls and favourable exchange rates made a home in Spain, Portugal or Italy a practical proposition.
Bolstered by the ease of movement in the EU and confident about finances, the numbers surged so that in some locations in Spain hearing Spanish on the street was becoming something of a novelty.
The credit crunch of 2007/08 caused some jitters, but the real game changer has been Brexit. British citizens currently living in the EU, or who move there during the transition period, will need to apply for residence status in their country of residence.
With Covid restrictions adding to problems, some expats have elected to return to the UK. Worries about healthcare add to concerns about residency status and – perhaps most important of all – money worries.
Some British pensioners abroad have returned home in recent years. In fact there may have been more retired expatriates coming home than moving to the EU during 2020 – although Covid may have complicated the picture. Some at least will have been worried about losing their residency rights and access to healthcare after the Brexit transition period.
But a retirement in the sun could still be in reach – with the right planning.
What has changed for pensioners?
The UK is now technically a ‘third country’ with regard to the European Union. This will affect all Britons living in the EU now, or planning to live and work or retire there. In most cases it will be possible to apply for residence. Although Covid restrictions have made this a little more difficult, the situation may be easing, and many countries will continue to welcome retired Brits.
However, the financial challenges will remain. The biggest impact of Brexit has been felt in GBP – EUR exchange rates. Pensioners may have seen a significant reduction in their pension income in Euros from a UK pension paid in Pounds. To put it bluntly; many pensions will no longer fund the sunshine lifestyle, particularly if it includes a UK home as well.
You can still claim State Pension if you have moved abroad. If you move overseas after you have started to receive your State Pension, payments can simply continue. British expats living in a number of other countries will have their State Pension payments increased annually under the triple lock – although UK expats in countries such as Australia, New Zealand, South Africa and Canada do not.
The answer may be to ensure that your pension income is more than adequate for your plans.
Getting the pension you need
Making your pension pot work hard enough to fund the lifestyle you want can be easier with expert help. The first step is to look at how much you have stashed away so far – and ensuring that it is being invested to deliver the kind of growth you need.
A call to us at Continuum can get an objective view of the kind of income your current pension arrangements can be expected to deliver. But we will not stop there
If your pension prospects are not looking adequate for a home in the sun, we can help find ways to help you build extra wealth for the future by making extra investments now.
Your Continuum advisor could discuss new pension plans, rebalancing your existing pension investments to take full advantage of the post-covid recovery in the markets – and have a broad investment base to help protect you against any further volatility.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable retirement strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.
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