If you have read my recent blog “Why people spend on annual holidays rather than save for their retirement” you will know that many people in retirement would like to relax, savour life, and enjoy the fruits of a lifetime of labour. Therefore, many must think what better way to do this than retiring overseas?
More and more retirees are coming to just that conclusion. According to an HSBC poll of British retirees, more than 5.4 million, or 38 percent, of retirees said they were actively looking for a retirement home in another country.
There are many reasons why a retiree may look overseas:
1) Weather: Why spend your golden years in cold weather? Exotic locations like Bali and Thailand offer sun nearly every day, with white sand and blue water nearby. Closer to home, Spain, France and Portugal are very popular warm-weather destinations housing over a 1 million retired Brits.
2) Change in lifestyle: You’ve worked hard your whole life, so you may want to take the opportunity to slow down in retirement. Many retirees want to move to locations that offer a completely different pace than what they’ve been accustomed to. City dwellers may want to try a more rural setting, while suburban retirees may want to try life in a major metropolis.
3) Less expensive property: Many overseas destinations offer less expensive housing than is found in major European cities. In particular, southeast Asia and certain islands in the Bahamas offer homes near the beach at very reasonable prices.
4) Less expensive health care: Many countries offer health care at rates significantly lower those found in many European countries. This can be very important to retirees, especially those who are dealing with chronic medical issues. Bermuda is a popular choice because health care is virtually free on the island.
5) Taxes: Many retirees move overseas to escape high tax rates in the EU. When you’re living on a fixed income, it’s important to reduce costs any way you can. Taxes are often one of the biggest expenses that retirees face, but they may be significantly reduced by moving to a more tax-friendly country.
While moving overseas may be an attractive option, you should plan carefully, especially from a financial standpoint. A financial advisor who has experience working with retirees overseas can help you plan for all issues that may arise.
Those issues can include cost of living. While moving to an overseas location may reduce day-to-day costs, it could also increase bigger-ticket items, like travel. All of the benefits of living in a less expensive country could be lost if you plan on travelling back and forth on a regular basis.
Currency exchange is another important factor to consider. Wild fluctuations in exchange rates can have a serious impact on your spending power in your new country. A financial advisor can recommend strategies to help smooth out those fluctuation and lock in rates.
Moving overseas can be a great way to make the most of your golden years. However, it requires careful planning and continued monitoring even after you make the move.
Consulting with a financial adviser, in order to determine what you can afford and what potential risks there may be along the way will help you to enjoy a financially secure retirement to the fullest.
Blog published by Mike Coady.