Retiring to a warmer, more exotic, country is something that many of us dream of doing – and sooner, rather than later. One in ten people over the age of fifty are currently considering retiring abroad, with the main reasons being a better lifestyle, a cheaper way of life and of course, better weather than the UK. Who can blame us for wanting to enjoy some sunshine in our old age? Perhaps unsurprisingly, the most popular retirement destination for Brits is still Spain, with other locations closer to home – France, Portugal, Italy and South East Europe – following close behind in the popularity stakes.
But growing old abroad can quickly turn from a dream into a nightmare if you don’t plan properly. Certain countries – including, for now, other EU countries – have reciprocal arrangements with the UK on state pensions, meaning that your pension will continue to increase at the usual rate. If you move to a country that doesn’t have such an arrangement, including Australia, New Zealand and Canada, you could see your pension frozen at the amount it was when you moved overseas.
With Brexit looming, perhaps this is something to bear in mind. Whether or not British citizens are still able to move to EU countries after we leave – or indeed stay there if they are already there – is one question. What happens to our reciprocal pensions agreement is another, and it’s something that many potential retirees may not have thought about. The numbers tell their own story, though. If you’d retired ten years ago as a single person to a place without an agreement – Australia, say – your state pension would have been frozen at £87.30 per week. It’s now £122.30 a week; a difference of £1,820 over the year. And for many of us, that’s an amount worth thinking about.