Having worked overseas for a large part of your career, you may face a huge decision when it comes to retirement: should you retire at home or abroad? Yes, you have probably spent a significant proportion of your adult life living overseas and therefore may think that it’s a no-brainer that you spend the later years of your life in the same way. However, retirement abroad is very different from living abroad for a number of reasons and there are a whole host of factors that you should take into consideration when contemplating how to spend your golden years. Here’s our lowdown on some of the things you will need to bear in mind when deciding whether to retire at home or abroad.
Your Retirement Income
Thus far you have probably received a regular salary and will no doubt have earned the money you need to enjoy a comfortable life overseas. However, once you retire, your wages will cease and you will be limited to whatever retirement income you have. When deciding whether to retire at home or abroad, you should consider the following:
- What is the cost of living like in your home versus your retirement destination? Can you afford to live in either one on your retirement income? Bear in mind that the cost of living back home may have changed significantly in the years that you have been living overseas.
- How will your retirement income be impacted if you decide not to return home? Are there any state pensions that are linked to where you live? For example, many British pensioners receive frozen pension incomes as a result of their decision to live in certain countries. Will this impact your income and potential to deal with future inflation?
Do you have somewhere to live?
If you have been living abroad for quite some time you may not actually have paid a mortgage on a property in your home country and therefore may not have the rent-free lifestyle than typical pensioners enjoy. If you do not own your own home in your host or home country then you will need to factor in the cost of buying or renting a property in either location and will need to ensure that you will have the retirement income needed to fund such a significant expense. While you may be tempted to purchase a property after retirement, you should do your calculations carefully. Remember that you will now be living on a fixed expense and may therefore will find future inflation and increases in mortgage rates difficult to fund.
What are the tax implications of retiring at home versus retiring abroad?
Many retirees can save significant amounts of money in taxes by retiring abroad as they may find that their host jurisdiction charges much lower taxes than their home country. If your retirement income is limited, it may be wise to look at different destinations overseas to help your money to stretch further.
Retirement visas and requirements
While you may have lived in a given location for many years, this does not necessarily mean that you are legally permitted to retire there. Before making any solid plans or committing any resources you should ensure that you research what requirements you will be expected to meet in order to retire in your host destination. Make sure you check out the full extent of any deposits or investments you will be required to make, the annual expenses that will be involved with maintaining a retirement visa, the minimum retirement income you will need and any other stipulations that may impact your ability to remain in the county over a long-term basis. If you are not confident that you can meet the requirements both now and in the future, then you should look elsewhere.
You should also bear in mind that visa and retirement requirements are subject to change at any time, so even if you do meet the specifications now, you may need to have a back-up plan in place in the event that they change in the future.
Healthcare access and quality
Healthcare should be top of your list of priorities when selecting a retirement destination and there are many factors that you should take into consideration. Whilst many retirees live long, healthy lives overseas, the likelihood that you will require medical attention is much higher as people can expect to encounter many more health problems in their post-retirement years. It is therefore crucial that you ensure that you have excellent health insurance that is valid for retirees in your host destination. Bear in mind that while you may be eligible for this care now, the older you get, the more difficult it may be to buy affordable health insurance.
In addition to ensuring that you have adequate coverage in place, you also need to consider the availability and quality of care on offer. You should thoroughly research the medial facilities that will be available to you and, in the event that you have an existing medical condition, should ensure that your needs can be adequately met. Some areas of the world will be better for this than others. Many parts of Latin America and Asia boast top-class hospitals, internationally trained staff and offer treatment at a fraction of the price than that found elsewhere in the world. However, others may not offer the drugs you need and may not be reliable in terms of the quality of care on offer.
Climate and environment
While you may love your host destination now, how easy will it be to live there when you are older and less mobile? For example, you may love the hustle and bustle of a major city at present, but as you age it may become increasingly difficult to navigate the busy streets and packed public transport network. Likewise, will you find your host/home destination too hot/cold/humid etc.? All these things need to be taken into consideration when deciding whether to retire at home or abroad and, when making the big decision about where to retire, you do need to face up to the reality that you will not be a spring chicken forever.
Make sure you research retirement abroad carefully. Our expat destination guides contain everything you need to know about living in major expat destinations throughout the world and can help you to ensure that you make the decision that is right for your needs.