More and more people are retiring overseas in a bid to find a higher quality of life in a more relaxing environment and are lured to pastures new with the promise of a new lifestyle that will exceed their expectations. While retiring overseas can represent a change for the better, it is important that you fully research the practicalities of relocating and are informed about how life overseas will impact your financial stability. Here’s five things you should do before retiring abroad.
1) Research the cost of living
Retiring abroad represents the fulfillment of a dream for many people and they may have worked a large percentage of their lives waiting for the day they can laze in the sun and enjoy the fruits of their labor. Unfortunately, however, many people fail to take into consideration what the cost of their live overseas will be and many fall into the trap of assuming that life abroad is cheaper than it is at home. Retiring overseas takes considerable planning and research and it is crucial that you fully understand how much you can expect to pay for accommodation, utilities, groceries and transport. For further information see our free guide to calculating your cost of living.
2) Ensure you have contingency funds
Understanding the current cost of living in your chosen destination is not sufficient. The world’s economy changes on a regular basis and the value of currencies and exchange rates are in a constant fluctuation. Make sure you budget for significant changes in the cost of living in your host country and have more than enough funds for a rainy day.
3) Understand how retirement overseas will impact your state pension
Depending upon which country you are from and where you relocate to, you may find that you are not entitled to pension increases in line with inflation and the government policies of your home country. If your pension will be frozen from the day you relocate, you will need to ensure that the existing balances in your accounts and your retirement income will be enough to support you over a long period of time. See our article on understanding your pension entitlements.
4) Understand currency exchange
Your pension payments will be paid in the currency of your home country and you need to understand how this will impact the cost of living in your host country. Significant changes in the value of one currency against another could mean that your living costs suddenly spiral out of control and you are no longer able to meet day-to-day costs. Consider utilizing the services of an expert broker who may be able to work with you to fix an exchange rate over a given period of time. Although this won’t enable you to completely avoid the impact of currency swings, it will offer you one route through which you can minimize risks.
5) Understand the cost of healthcare and ensure you have sufficient medical insurance
Again, depending upon where you are from and where you move to, you may or may not be entitled to healthcare in your host country. Ensure that you fully research what provisions will be available to you and the costs associated with them. Make sure you budget for these and arrange appropriate insurance if it will be required. For further information about expatriate medical insurance see our free guide to expat insurance.
If you’re considering retiring abroad and could benefit from further help and advice then you should consult our free guide to retiring abroad.