Best places to retire for ‘cheaper way of life’ – top 10 locations

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While the UK faces its sharpest incline in living costs in 40 years, the desire to retire abroad has never been so prevalent. New research by Canada Life shows 54 percent of those surveyed would like to retire abroad for the cheaper cost of living, up from 45 percent in 2021. But which location has been voted as the best?

Unsurprisingly, retiring in the UK is considered to be more expensive than retiring abroad and on average, the over 50s surveyed thought it would require a monthly household income of £1,931.

The average monthly income needed to retire abroad, however, is thought to be around £1,430.

Andrew Tully, technical director at Canada Life said: “The dream of retiring abroad is alive and well, despite the economic headwinds and global pandemic.

“The thought of a better lifestyle and weather, coupled with a cheaper way of life drives many over 50s to have a desire to extend the dream holiday to a permanent situation. The cost of living crunch, if anything, has made it more likely people will jump ship from the UK.”

The research revealed that up to 64 percent would migrate for the better lifestyle, with the same doing so for the better weather, which are very similar figures to last year according to the financial services company.

Top 10 locations to retire abroad

For the last decade, Spain has topped the poll as the most popular overseas retirement destination with 46 percent voting it the best location. Portugal pips France into second place with 21 percent of votes.

However, France hasn’t strayed too far from second place with 19 percent ranking this location top, placing it third in the list.

Italy places fourth best location with 16 percent of votes, while the south-east of Europe (including Greece, Romania, Serbia, Cyprus) places fifth with 14 percent of votes.

Retiring in the Far East (including China, Thailand, Japan, Hong Kong, Singapore, Philippines) is most popular among eight percent of voters, while the same voted Australia and America to be top.

New Zealand and Turkey were voted most popular by seven percent and five percent respectively, rounding off the top 10 areas to retire to.

For those considering retiring abroad, it’s important to consider the impact of reciprocal social security agreements.

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Mr Tully warned retiring abroad “is not a step to be taken lightly” He continued: “The financial considerations are vast, such as thinking about the impact of currency exchange rates, local tax rules, and whether state pensions will keep pace with the cost of living.”

Countries in the EU – and 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 – but it’s important to understand whether the agreements are in place further afield.

According to the House of Commons Library, of all state pensions paid overseas, 43 percent are frozen.

Canada Life’s research revealed, however, that one in four (23 percent) weren’t aware of such agreements while just one in five (20 percent) know which countries had reciprocal payment agreements in place.

Mr Tully said: “To help navigate the complexities around retiring abroad, it’s important to seek expert advice from someone who specialises in expatriate finance.”

People can seek such advice on www.unbiased.co.uk.

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