Thursday, July 25, 2013

British Expats Find Retiring Abroad the Right Choice

My sponsored guest today is Michael Jones. He is a freelance writer and blogger who writes on such topics as international affairs, world finance, retirement and investment. His areas of expertise include European, Asian and Latin/South American economic policy and QROPS. When not at work, he enjoys anything and everything outdoors. 


With the recent falling standards of living in Britain, many retirees are taking the plunge and heading overseas to enjoy their golden years in more fiscally serene environs. For those that no longer have to work every day, dreams of warm weather and lower costs of living are motivating retirees in droves to such countries as Spain and Australia.

It is estimated that more than 1 million Brit’s have moved overseas to retire. The most popular place to retire in Europe is Spain, long one of the most popular vacation destinations for British citizenry. Approximately 104,000 pensioners live there. The most popular country for British pensioners is Australia, with over 250,000 taking up residence there.

This article will look at the reasons many choose Spain as their retirement home. Besides the warmer and sunnier climate, many retired expats find other reasons to move as well. For example, the lifestyle is laid back and the standard of living is comparable to that of the UK.

Without the benefit of a QROPS, many retirees would find it impossible to live overseas. The formidable tax break that a QROPS provides is a big factor in retirees being able to afford living overseas. But regardless of where a British Expat decides to retire, it is quite important for them to keep up with their QROPS like they would with any other investment. Fluctuations in the market and rising costs of living in their country of residence should play into a retirement strategy that ensures a comfortable standard of living can be maintained for the life of the pensioner.

Cost of Living

The cost of living for most places in Spain is cheaper than in the UK. Other figures that the cost of living is 20 to 30 percent cheaper overall in Spain than in the UK. Thirty percent is quite a substantial amount, and no doubt contributes to the popularity of retiring to Spain. However, unexpected costs like heating and air conditioning in particular during the summer months may mean higher electricity bills than what might be expected.

Housing costs are quite reasonable when compared to the UK but can be higher in the cities and more popular tourist areas. For a pensioner, the profit from selling a detached home in the UK can be put into a home or apartment in Spain and leave the pensioner some extra money to invest or spend on other items.

Food is relatively cheap compared to the UK. However, dining out can get expensive especially if it is in a tourist hotspot. But that is the same wherever you live. Grocery expenses tend to run 10-15 percent cheaper in Spain than in the UK. But if you prefer already prepared food the cost is likely to be about the same or a little less than what was spent in the UK.

Petrol for vehicles and maintenance are cheaper in Spain. Buying a used vehicle in Spain, however, is more expensive than buying one in the UK. Car insurance is about the same in both countries. It is far cheaper to insure a vehicle registered in Spain than it is to insure one that has a UK registration.

The Downside

There are some downsides to living in Spain. Electricity can run about 20 percent higher than in the UK for a similar sized piece of property. Gas for heating and cooking is not readily available in all parts of the country. Where it is it typically runs about 20 percent higher than in the UK. Bottled gas is quite expensive in Spain.

Some older apartments don’t have central heating and cooling so it is important to consider the cost of using bottled gas to heat the home during the winter months, which can be quite cold.

Note: QROPS is defined as

Qualifying Recognised Overseas Pension Schemes (QROPS)

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