Affluent international professionals/global citizens, spend a great part of their career working abroad. When it comes to retirement planning, many prefer to retire in a place other than their home country. More than likely, it is a country that they visited or worked in during their travels.
Recent trends show an increase in international retirement for affluent professionals. With many being well travelled and experienced in many cultures, the world has opened up new opportunities that were never considered before. Gone are the days of retiring in your home country regardless of whether you enjoy the climate or not. The world has become smaller through technology and communications, and airlines offer many new routes to previously difficult to reach destinations.
The top retirement destinations currently are:
1. Panama
2. Costa Rica
3. Mexico
4. Portugal
5. Colombia
6. Ecuador
7. Malta
8. France
9. Spain
10. Uruguay
(International Living 2022 Global Retirement Index: based on residence, climate, healthcare and cost of living)*
Reasons for wanting to retire abroad could be:
- Cost of living in the chosen country is lower and allows for a luxury retirement
- Enjoy the culture/lifestyle and find it ideal for retirement
- The climate/weather is milder or sunnier
- Closer to family living abroad
- Ideal location for a small business e.g. a B&B in Greece or a tourism service in Thailand etc.
There are many different reasons for retiring abroad, but regardless of where you decide to retire, it does require careful planning and budgeting, not just at retirement but also in the years leading up to it.
You need to have a clear picture in your mind of how you see your retirement. The next step is to do careful research about the lifestyle, culture, economy, cost of living, healthcare facilities and properties.
Also, a clear financial plan is needed to ensure you can live the lifestyle you want. Your financial adviser will help plan your dream retirement.
Besides all the research about your future retirement home, there are other things to consider regarding your pensions and tax.
- Consider where your pensions will come from. You might have private/work pensions in your home country and also private/work pensions from countries you have worked in.
- You might be eligible for state pensions from your home country and other countries you have worked in.
- If they were all in the EU, then they could be calculated as one pension depending on the combined amount of years worked and eligibility.
- Consider the taxation of all these pensions? Generally pensions are taxed in the country of residence, but the country you receive your pension from could also want their slice of your pension. If there are double taxation treaties between these countries, it should prevent this. Check with your tax adviser regarding this.
- If you have multiple pensions in various countries, you might consider transferring them into one tax efficient pension fund – this must be done with consideration from your adviser as it depends on your unique financial situation.
- Generally, if you retire in the UK, you are entitled to a 25% tax free lump sum. If you are living abroad when you retire, you might have to pay tax on the lump sum.
It is always recommended to chat to your deVere Acuma adviser about the financial and tax implications of retiring abroad. [email protected]
*https://internationalliving.com/
Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere Acuma adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.