More than 5 million Brits are considering buying an overseas retirement home – while 592,000 confirmed they will definitely move abroad when they give up work, according to a new study.
HSBC Bank asked people aged between 45 and 64 years old whether they would consider retiring as expats and found the number had risen from 4.6 million in August 2006 to 5.4 million in 2013.
However, although a place in the sun seems a good idea, two-thirds want to keep their options open by spending up to six months a year in the UK.
Spain (26%) and France (15%) are the most popular retirement destinations, while those outside Europe featuring in the rankings were the Caribbean (5.2%), Florida (4%) and Turkey (2%).
The average price most buyers would expect to put into a home in another country is £116,846, says the bank.
Downturn effects
Most would buy outright rather than with a mortgage. Some (4 %) would downsize in the UK to help fund the purchase, while a few (4.5%) would put any pension tax-free lump sum towards buying overseas.
Just over half (55%) would buy a two-bed villa or apartment – with a quarter going large with a three or four bed villa.
The study also revealed the downturn had no effect on the aspirations of 55% of those approaching retirement.
Others disclosed they are scaling down their plans by buying a smaller home abroad (29%), looking for a cheaper location (15%) or moving closer to the UK to cut travel expenses (9%).
Only 1.3% admitted they were now looking for a larger overseas retirement home.
Check out costs
Two-thirds want to buy on the coasts, 26% in a city while the rest are looking for a quieter environment in the countryside or mountains.
HSBC’s James Yerkess said: “While the downturn has impacted on the wealth of many expecting to buy overseas, house prices have also decreased abroad. This has cancelled out the loss of buying power of those approaching retirement.
“Many have seen property prices fall unexpectedly in many locations, so are wary about spending as much as they would have liked before the downturn on a retirement home.”
The bank suggests that anyone buying a holiday home abroad should look carefully at buying costs, local taxes and funding maintenance.
Top 10 Retirement Destinations for British Expats
| Destination |
% |
|||
| 1 | Spain |
26.2% |
||
| 2 | France |
15.5% |
||
| 3 | Italy |
9.5% |
||
| 4 | Portugal |
6.7% |
||
| 5 | Greece |
6.7% |
||
| 6 | Cyprus |
5.2% |
||
| 7 | Caribbean |
5.2% |
||
| 8 | Balearic Islands |
4.3% |
||
| 9 | Florida |
4.0% |
||
| 10 | Turkey |
1.9% |
||
Source HSBC Bank
Interesting statistics but it is perhaps worth remembering that of some 1.2 million UK pensioners who live abroad just over half a million do not live in the countries mentioned but in Australia (250,000+), Canada (157,000 +), New Zealand, South Africa and 120 other countries around the world.
What is the connection? Simple – their UK State Retirement Pension is frozen at the rate at which it first becomes payable in that country. No index linked annual increases – ever.
As, Oliver Letwin, MP and Senior Cabinet Office Minister said “A product of history not rationality!”
Even the current Pensions Minister Steve Webb, when in opposition, acknowledged that the frozen pension policy is unwarranted discrimination. Now not only does he condone it but is seeking in his Pension Reform Bill to justify perpetuating this iniquity by – to be polite and in parliamentary language but which we all understand really – giving misinformation to the House and to the Reform Bill Scrutiny Committee.
One wonders just how many of those who, for example, cite the Caribbean as their destination appreciate that if you go to Barbados your pension is uprated annually but settle in Trinidad and you are frozen?
The campaign to right this injustice continues and the International Consortium of British Pensioners are at the forefront of the fight for Justice, Fairness and Equality for ALL British Pensioners Abroad and parity with those pensioners resident in for example, the UK, the EEA and Macedonia, Serbia, the Philippines and USA
The one comment by Andy Robertson-Fox is a situation that many retirees are unaware of and with the UK pound dropping in value in recent years this frozen pension policy becomes a serious problem when the spending power of your pension is steadily reducing. Apparently 42% in the last 10years. There are many reasons for people to emigrate and the one strong reason is to join family who have previously gone. In this situation the country to which you retire is not a choice . Should it be a frozen one then this really puts the retiree on the spot. To go and have your pension frozen or stay and save to make an occasional visit if possible. Therefore to go without knowing could mean lack of funds in the short term and poverty in the long term without other means to rely on.
It should be mentioned that up to now this policy is still part of the new Pensions Bill passing through parliament. I would call on everyone reading this to write to their MP before the bill is passed.