Pre-retirement Brits are likely to follow older generations by looking to live outside of the UK for their later life.
According to research by Canada Life, some 64% of pre-retired over-50s who want to retire abroad are doing so for the better lifestyle, with the same number contemplating the idea for better weather.
A further 54% would like to retire abroad for the cheaper cost of living, which is up from 45% in 2021.
The cost-of-living crisis has made more than half the over 50s (51%) more likely to make the move in the future, with 9% less likely to do so due to rising living costs.
But Brexit is impacting decisions as 53% are reconsidering where they might retire to due to the UK leaving the EU. A further 48% said Brexit is making them reconsider their plans altogether.
Destination
For the last decade, Spain has topped the poll as the most popular overseas retirement destination.
In a reversal of fortune, Portugal pips France into second place.
| Retirement location | % | Position in 2022 | Position in 2021 |
| Spain | 46% | 1 | 1 |
| Portugal | 21% | 2 | 3 |
| France | 19% | 3 | 2 |
| Italy | 16% | 4 | 4 |
| South eastern Europe (e.g. Greece, Romania, Serbia, Cyprus) | 14% | 5 | 5 |
| The Far East (e.g. China, Thailand, Japan, Hong Kong, Singapore, Philippines) | 8% | =6 | 6 |
| America | 8% | =6 | 9 |
| Australia | 8% | =6 | 8 |
| New Zealand | 7% | 9 | 7 |
| Turkey | 5% | 10 | 10 |
Source: Canada Life
With many retirees considering moving abroad for a cheaper standard of living, the average monthly income needed is thought to be £1,430 ($1,644, €1,644).
Retiring in the UK is considered to be more expensive than retiring abroad, and on average the over 50s thought it would require a monthly household income of £1,931.
For those considering retiring abroad, it’s important to consider the impact of reciprocal social security agreements. Countries in the EU – as well as many others – have these agreements with the UK, which means the state pension will increase each year in the same way as retirees living in the UK – but it’s important to understand whether the agreements are in place further afield.
Currently, of the state pensions which are paid overseas, 43% are frozen.
The 1,000-person research revealed that 23% weren’t aware of such agreements, while just 20% know which countries had reciprocal payment agreements in place.
Jumping ship
Andrew Tully, technical director, Canada Life, said: “The dream of retiring abroad is alive and well, despite the economic headwinds and global pandemic.
“The thought of a better lifestyle and weather, coupled with a cheaper way of life drives many over 50s to have a desire to extend the dream holiday to a permanent situation. The cost-of-living crunch, if anything, has made it more likely people will jump ship from the UK.
“Retiring abroad is not a step to be taken lightly though. The financial considerations are vast, such as thinking about the impact of currency exchange rates, local tax rules, and whether state pensions will keep pace with the cost of living.
“Offshore bonds can play a role in expatriate financial planning as they can be left to grow almost free of tax with no restrictions on how much can be invested. They can also be a vehicle for additional savings without the hassle of dealing with complicated pension regulations. The choice of country is important as when money is withdrawn the taxation rules of the country in which the client resides will apply.
“To help navigate the complexities around retiring abroad, it’s important to seek expert advice from someone who specialises in expatriate finance.”
