Have you ever thought about retiring overseas? It is a dream for many to enjoy their golden years under a sunnier climate, in a cheaper country, or closer to family (in the case of foreign workers). Before you take the plunge and pack your bags, you should think about several aspects of your overseas retirement.

Retiring overseas, things to consider

Where will you retire? The list of heavenly destinations is long, but what country suits you most? Will you speak the language or be willing to learn? Make a list of your priorities, such as proximity to an airport, a supermarket, a library, the need for a car, and so on. What are your non negotiable? How far off the beaten paths do you want to live? You may be looking for some sun but can you bear real heat for months at a time? How about immigration or banking?

You can find lots of expat forums to inquire about the cost of living, renting or buying a place, healthcare, food, domestic help and other expenses. Remember to consider the time difference with the UK if you want to keep in touch by phone on a regular basis, as well as the cost of a flight if you would like to come back once in a while.

The cost of local products can be very low overseas compared to the UK, while other things like internet service, imported foods, healthcare… could be higher. You need to determine the overall budget to make sure it fits your pension allowance.  Once you take into account the cost of flights, some European countries may actually end up cheaper than places like Turkey or Egypt.

Talking to a few people who already live there can be enlightening, as they will have an in-depth knowledge of the area, something that is difficult to get if you visit for a week while on holiday. Ask about the seasons, the political situation, the health system… and how expats blend into the local community.

Local expats are also a good source to tell you where to get a first flat or house, the neighborhoods to avoid and the price you should expect to pay. Having a temporary home for the first few months allows you to search for the perfect place without stress. You could ship your belongings, generally with a tax exemption if you are a resident in your new country, or just bring the minimum with you and furnish your new place locally.

A few UK credit cards will let you withdraw money abroad without a commission, apply for one of those before you leave so you can get money while you set up a bank account in your new country.

The next step to consider is how to get the best value of your pension pot.

Transferring your pension abroad with a QROPS

QROPS means Qualifying Recognised Overseas Pension Scheme. It is a pension scheme approved by HM Revenue and Customs, that allows you to transfer your pension benefits overseas without any penalty. For this you need to decide to retire abroad, in a country of the UE or any other country that has a double taxation agreement with the UK, like Thailand, the USA or Zimbabwe. You can receive part of your pension as a lump sum, but 70% of the nest egg need to be invested to produce a lifetime allowance. To be worth the move, you would need a pension nest egg of over £25,000.

Qrops information is available online, to make sure you get the most of your UK pension. This is a popular scheme for expats since your pension pot will not be taxed under UK law, but in your country of residence. There are also no lifetime allowance caps or age limit to purchase an annuity. Your UK pension scheme administrator will take care of the transfer and make sure it complies with HMRC requirements. This scheme does not apply to your state pension.

Have you ever considered retiring abroad? Which country has your preference?

The car you choose to drive affects the amount of money you pay each month in insurance premiums.

Car insurance is mandatory rather than voluntary – if you want to drive you must have at least a basic third-party policy from an insurer such as 123.ie, otherwise you are breaking the law.

This is to protect other drivers and anyone else who may be injured or have property damaged as a result of your driving. Insurance can be costly, particularly as a new driver when you haven’t yet been able to build up any no-claims bonuses.

To avoid spending more than you can afford on insurance premiums you need to be a little bit savvy about the type of car you drive. You may want a great big powerful engine, but will end up paying somewhere in the region of three times as much money each month for it, and usually for the privilege of sitting in slow-moving traffic for hours on end anyway!

The smaller a car engine the lower the insurance premiums tend to be. A 1.0, 1.1 or 1.2 litre engine will usually fall into one of the lower insurance brackets.

Other features insurers look out for are low mileage, a good safety rating, the cost of repairs, parts and maintenance and the additional safety features that are fitted, as well as the initial cost of buying the car new and the age of the vehicle.

Cars such as the Chevrolet Spark, Fiat Panda and Punto, Ford Fiesta and Ka and the Skoda Fabia range have small engines and perform well in safety tests. Parts are usually relatively cheap and they are quick to repair in most cases.

All these factors significantly reduce the amount of insurance you will have to pay. As you gain more driving experience, you personally build up a better profile with insurance companies.

Your first car needs to get you from A to B – wait a few years before investing in a bigger, more powerful machine and you will save yourself a small fortune.

Photo: dno1967b

Joe Saul-Sehy

Joe is a former financial advisor and media representative for American Express and Ameriprise. He was the “Money Man” at Detroit television WXYZ-TV, appearing twice weekly. He’s also appeared in Bride, Best Life, and Child magazines, the Los Angeles Times, Chicago Sun-Times, Detroit News and Baltimore Sun newspapers and numerous other media outlets.  Joe holds B.A Degrees from The Citadel and Michigan State University.

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