Since Boris Johnson became prime minister it has heightened fears that the UK will leave the European Union without a deal and these concerns over Brexit are reaching potential expats.
Canada Life recently surveyed 1,006 over-50s, who are yet to retire and would consider moving abroad, about their plans.
It found apprehensions over Brexit have made nearly half (45%) of those who are planning to retire abroad reconsider if they should do so.
A similar number (46%) think Brexit has made them reconsider where abroad they might retire to.
Andrew Tully, technical director at Canada Life, said: “As part of the Brexit negotiations, reciprocal social security agreements have been reflected in the withdrawal agreement, and in the event of a no deal the UK has stated it would preserve the up-rating of the state pension.
“But it’s worth keeping in mind how your financial position would be affected by changes to these agreements, how incomes currently paid in sterling would be impacted by currency exchange rates, as well as how your UK state pension may not keep pace with cost of living increases.”
The survey found that only one in four people (24%) were aware of which countries had such security arrangements in place, which can have a significant impact on benefits including the state pension.
One in five (20%) said they weren’t even aware of such arrangements.
Countries in the EU, as well as many others, have reciprocal social security agreements with the UK, which means the State Pension will increase each year in the same way as retirees living in the UK.
However, countries which are popular retirement destinations including Australia, Canada and New Zealand do not have these arrangements in place, meaning the UK state pension will not increase.
Tully added: “To help navigate the complexities of retiring abroad, it is vital people seek professional financial advice. There are a number of companies who have experience advising budding expats.
“Receiving the right advice could make all the difference between making a retirement dream a reality and avoid it potentially turning into a nightmare.”
The nation’s favourite retirement hotspots are (with 2018 rankings in brackets):
|1st: Spain (1st)
|6th: Australia (9th)
|2nd: France (2nd)
|7th: New Zealand (7th)
|3rd: Portugal (3rd)
|8th: Far East (8th)
|4th: Italy (=4th)
|9th: America (6th)
|5th: South East Europe (=4th) (e.g. Greece / Cyprus)
|10th: Turkey (new entry)
The survey found that UK expats are more likely to move because elsewhere because it has better weather than the UK (69%).
Other reasons were people plan to retire abroad include the prospect of a better lifestyle (65%) and cheaper living costs (44%).
Tully added: “Whether it be the hope of better weather, cheaper living costs or simply a lifestyle choice, many of us harbour desires to retire abroad.
“Given the prevailing headwinds and uncertainty continuing to surround Brexit, it’s perhaps not a surprise to find the ‘B’ word having a big influence on peoples’ plans for retiring abroad.
“Other things people will need to consider include a new set of retirement risks, whether that be local tax laws, feeling the pinch because of currency exchange rates or financial scammers.”