Retiring abroad? What you need to know before you go

Thinking of retiring abroad? Emma Lunn is a personal finance expert for papers including the Mail, Guardian and Telegraph. She explains what you need to know to make the move a success.

Thousands of Brits retire abroad each year. But before you jet off for a new life in the sun, make sure you understand how it will affect your finances. Expat retirees need to be clued up about how the move will affect their retirement income and how best to transfer their savings to another country. Here are 5 important things to consider if you're retiring abroad.

1. Currency conversion

Whether you’re receiving money from the state pension or a private pension, transferring your savings to your new country, or paying a mortgage on your new home abroad, you’ll want to get the best deal on currency conversion.

It’s best not to use your bank for this, as banks often charge high fees for currency conversions as well as offer poor exchange rates.

One way to circumvent this is by using Wise. It’s quick to set up, the transfer is typically complete in a fraction of the time it takes with a bank, and it’s much cheaper. You’ll get a competitive mid-market rate for a small fee.

Sean Whewell, a Brit who bought a home in Spain ahead of his retirement, saved about €5,000 by using Wise when he bought his property in Spain. He explains:

"We use Wise on a monthly basis as well because we’ve got two properties in Spain, and obviously each of those properties come with bills, for example, utility bills and insurance. So, we use Wise to transfer regular monthly amounts across to our bank in Spain. We use the website and app, and it is easy to use and feels secure."

"The Wise app gives me the ability to look for a specific rate that I’m happy with. So, for example, we needed to transfer across €150,000, so we were able to calculate what euro-pound rate we’d need to wait for. The ability to refresh and see that rate going up and down is fantastic."

Sean also has some advice for timing your transfer:

"You soon get accustomed to things that impact the foreign exchange market — for example, if there’s a positive announcement relating to vaccines in the UK, or if there’s a negative one in Europe. It helps if you can plan properly — if you know that you need to transfer some money in the next few weeks, you can calculate the rate you need."

See how much you could save with Wise by trying its calculator tool.

2. Finding a home abroad

The first big decision you have to make about retiring abroad is where you’re going to go. France, Spain and Portugal tend to be typical choices due to their proximity to the UK and decent weather. Other retirees pick countries that speak English such as Australia, New Zealand or America.

Bear in mind that to live abroad you may need to get a visa or permanent residency. If you plan to buy a property, you need to find a country happy to sell homes to foreigners (some countries don’t allow this).

You also need to think about the sort of lifestyle you want to have. Do you want to live in an expat community or alongside locals? Or perhaps you fancy living close to other retirees?

3. Pensions

Most retirees moving abroad will be relying on income from either their UK state pension, a private pension, or both.

Assuming you've paid enough UK National Insurance contributions to qualify, you can claim the state pension while you're abroad.

Your state pension will increase each year, the same as it would in the UK, but only if you live in the European Economic Area, Switzerland, Gibraltar, or certain countries that have a social security agreement with the UK (including the US). This means that if you retire to some other countries, including Australia and South Africa, you won't receive any annual increases in your state pension.

If you have a private pension, you will be able to leave it in the UK and benefit from the same range of options that UK-based retirees have under the pension freedom rules. This means you can take part of your pension as cash, buy an annuity, use income drawdown, or combine these options.

4. Healthcare

Since Brexit, the European Health Insurance Card (EHIC) has been replaced with the Global Health Insurance Card (GHIC) which works in much the same way.

You can still use your EHIC until it expires – you then need to apply for a GHIC. Either card entitles you to state healthcare on the same level as that given to locals, although this might not be equivalent to the care you’d get on the NHS.

For some countries it can be a good idea to take out private health insurance to work alongside your EHIC or GHIC.

5. Brexit

Brexit has undoubtedly complicated things for Brits planning to retire in Europe. Brits are free to travel to any EU country and stay there for up to 90 days in a 180-day period without a visa. But if you want to stay longer or permanently, you need to go through a residency application common for all non-EU citizens.

This will vary from country to country and can take time and money.

Sean's home in Spain is currently being renovated. He wanted to find somewhere in a small village in the Pyrenees where he can fulfill his hobby of marathon running in the mountains, and also pick up the language once he's retired. He explains:

"Post-Brexit, we have to go through the residency process and become formal residents, or we’re limited to spending 90 days at a time. The goal is to become Spanish residents and do it full time."

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Retiring abroad gets simpler with the Wise multi-currency account — an account that lets you receive, hold, and send over 50 different currencies. You can also spend that money with the Wise debit card, which gives you better exchange rates and lower fees than your bank.

It's money without borders — perfect for international people. Create your account today.

Written for Wise by Emma Lunn. Photography by Freddie Hazael.