Most people approaching retirement will have welcomed the spring budget 2014, including those on the verge of retiring abroad who would benefit from a lump sum to help them purchase or settle in their new country.
Osborne’s easing of regulation governing pension pots – including the freedom not to buy an annuity, the reduction in the tax rate levied on pensions taken below the age of 55, and the ability to release a higher value lump sum – will bring flexibility in what you can and can’t do with your pension, including putting it towards a foreign property purchase or overseas retirement. We’re all working for our perfect retirement – enjoying it somewhere sunny has just got a bit easier.
We’re all working for our perfect retirement – enjoying it somewhere sunny has just got a
bit easier
Having better access to a pension fund might mean less of us consider the option of equity release from our homes. According to the Equity Release Council, Brits are releasing equity from their homes at levels not seen since before the 2008 financial crash.
The over-55s in the UK borrowed more than £1bn against their homes in 2013, accounting for 19,000 borrowers, said the Council. This compares to 30,000 borrowers in 2007 – when equity release peaked – and 16,000 in 2011, when the UK was suffering economic hardship.
Figures show that the upper amounts of cash being borrowed against homes has reached one of the highest averages ever, namely £60,000 – the cost of a two-bedroom beach apartment in the southern Costa Blanca!
While today there are more opportunities to use UK equity to fund an overseas property purchase compared to within the past five years, Brits are strongly advised to do their sums, take professional advice and not over-stretch themselves – especially given buying abroad could leave them exposed to currency markets.
All that said, careful planning and some serious saving is needed if we want to move abroad for a long retirement. Why? Today’s working population will need to wait longer than their European neighbours before having the opportunity to retire to the sun, on account of a lack of savings and poor pensions, according to a recent report by global research firm Nielsen.
The report showed that one in five Brits now don’t expect to retire before they are 70, compared to just 12 percent in Europe. Meanwhile, 44 percent of people said they expect to work beyond the current UK pension age of 65 – whether into their late 60s or into their 70s, which again compares significantly with 25 percent for the rest of the world.
Retirees constitute a significant portion of British expats in popular European destinations, including Spain and France.
The evidence suggests that upping sticks and moving somewhere sunny for your retirement might not be as easy for younger generations as it has been for current pensioners, or those in other countries.
And with prices in most of Europe remaining depressed and sterling holding its value agains the euro at around £1/€1.20, conditions really are favourable to British retirees.
We recently came across a maternity nurse Julia Lannaman, a Jamaican living in London, who found her dream retirement home in Spain’s Costa Blanca, following a fruitless house-hunt in England.
Julia visited the southern Costa Blanca where local estate agency HomeEspaña showed her a selection of properties. She found what she was looking for on the second day of her trip – a three-bedroom townhouse in Villamartín – and returned to complete the purchase in July, paying the purchase price of €80,000, plus fees and taxes of €9,000.
With deals like that around, there’s not a lot to lose!
Richard Way is the Editor of The Overseas Guides Company, 0207 898 0549.
For further information visit www.spainbuyingguide.com
