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The Telegraph recently quoted a YouGov Report that found a third of
Britons are considering emigrating in order to ease their financial
worries. A third – that’s almost 21 million people, are thinking of
leaving the country because they’re worried about their income.
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In another recent survey undertaken by Aviva, they found that 70% of British workers fully expect to (expect mind you, not might) have to work beyond their normal retirement age simply to make ends meet. That’s a staggering 33 million people. Odds are that you’re one on them.
The same survey confirmed that more than 60% of people over 55 were more concerned about their finances because of rising taxes than they were about the state of their own health.
These appear to be really colossal numbers and a terrible condemnation of the welfare state in the UK, particularly in the way it affects pensioners. But is it really that surprising? 70% of workers probably are worried about how they are going to pay for additional taxes. Although 21 million people in the country might consider emigrating, the plain truth is that only 400,000 actually do so. Nevertheless, 400,000 is still a big number.
Plenty of British pensioners have moved abroad in the hope of making their pensions and savings go that bit further. About 540,000 at the last count, living in 150 different countries. But there are dangers, quite apart from the emotional upheaval of leaving family and friends behind. Tax is one.
If you become non-resident you don’t have to pay income tax on non-UK based income or capital gains (CGT), but you’ll still pay income tax on your UK pension. If the country you move to doesn’t have a double tax treaty with the UK, you could end up paying a second batch of tax on your pension before you actually receive it. You will still be liable for CGT on your UK based assets and you will still be liable to UK inheritance tax on your worldwide assets.
We don’t have the space here to go into the technicalities of what hoops you have to jump through to become non-resident and it is absolutely essential to take professional advice before committing to a move abroad.
You must also consider the problem of the foreign exchange risk if having you have your income in one currency and your expenditure in another. This is fine if the exchange rate goes in your favour, but it might not, and if it goes against you it can become very painful.
The other main financial worry of moving abroad in retirement is that you might not get any increase in your pension over time. Unless you emigrate within the EU or to one of 15 other countries, your pension can be frozen at whatever level it’s at when you move abroad. It won’t increase with inflation and the value of your pension will therefore diminish as time marches on.
So if you are thinking about retiring abroad, make sure that you organise your affairs in the most tax efficient way, and do make sure that you get the right advice.
On the other hand, if emigrating is all too much drama for you and you want to stay in dear old Blighty, you are going to have to give more than a little thought to how much retirement income you are going to need.
You don’t have to keep working at the same old job and there are lots of opportunities to do part-time work on your own account working from home. This Retirement Revenue website has a free eBook giving a number of ideas about how to set up your own small business and there are many articles on this subject as well as on savings, employment and investments.
It's not an easy decision - think on.