Retirement Woes for Britons Abroad

According to the British Foreign office, thousands of British citizens who retired abroad end up living in poverty and poor health because they made inadequate provisions for their new life. Data from the Office of National Statistics shows that one million Britons choose to move overseas on retirement, with Spain being a popular choice. In the last 10 years over 75,000 British pensioners moved here. While Spain may be cheaper than the UK in many ways, it is still one of the “more expensive” countries to retire to.

The dream of a new life in the sun can be very alluring. Tales of people who’ve already made the move and TV programmes making it look easy encourage others to follow suit. Unfortunately, as a report by Overseas Property Professional (OPP) explained, “bad financial planning means that many of these retirees find themselves in dire straits. With people now living a lot longer, especially in healthier climes, impoverished retirees are finding it hard to maintain their dream lifestyle.”

A spokesman for the Foreign Office said “It is astonishing how many fit and healthy retirees make no plans or provisions of any kind for their future health and wellbeing when they retire abroad… We are not trying to warn people off retiring overseas – we just want to advise people to make sensible precautions in order to enjoy their retirement abroad.”

To give an example about the situation in Spain, Bruce McIntyre, British Consul in Malaga, has commented: “Sadly now we spend much of our time dealing with elderly British nationals who moved out here ten or fifteen years ago and now cannot manage alone. Sometimes a partner has died and the other is too old or infirm to go out and buy food; sometimes people have made bad property investments or have not budgeted their pensions sufficiently and are living in extreme poverty.”

The OPP report included comments from Spanish property lawyer Mark Wilkins who pointed out that many people buying property in Spain do not fully consider how they will fund their retirement. Even those people who now consider themselves wealthy because their UK property has increased in value considerably don’t do their sums correctly:

“With a growing number of property millionaires in the UK, who may be able to realise the full value of the property when they retire, how much would someone need to fund their retirement - £1 million, £2 million, more? Based on the equation that you need to multiply your required income by 25, £1 million would give you £40,000. Amazingly, many experts suggest that a retired couple will need at least £2 million (€2.9 million) in the bank to give themselves a pre-tax income of £80,000 - and that’s without the costs of acquiring the retirement apartment or villa in the sun.”

The cost of living in Spain may still compare favourably with the UK, but it is rising and therefore eating into one’s retirement pot. As one estate company, Sol Andalusi, admitted, “for early retirees in Spain, inflation is definitely taking its toll”