Andrew Tully at MGM Advantage, a retirement income specialist, says that “retiring abroad is an aspiration for many people. Thoughts of better weather, cheaper living costs and potentially cheaper property than in the UK can prove a strong draw.”
Indeed. The latest data shows UK inflation or consumer price index rose by 2.7% in May, that is up from 2.4% in April. The increase left British households in need to find at least an extra £17.7 billion per year, according to MGM Advantage calculations, only to maintain the standard of the lifestyle they used to enjoy 12 months ago. “Each household will typically need to spend an extra £678 a year to maintain their standard of living from just one year ago,” explained sales director Aston Goodey.
The State of Retirement Report, recently published by Opinium’s Desk Research on behalf of another retirement specialist company, LV=, showed that 1.9 million–15%–retired Britons currently bring in a combined state and private pension income of £154 or less per week.
No wonder inflation has been termed “the single biggest problem” facing the UK economy “due to its power to erode the value of savings and income,” as Goodey put it in an MGM Advantage note. He added: “We are still in a climate of low interest rates and low growth so many savers continue to feel the squeeze on their savings and retirement plans.”
With the island’s economy performing weakly, households on low or fixed incomes and the British who rely on pensions to fund the cost of living are set to continue suffering financial pain. In fact, almost 90% of people choose a level annuity when they retire, which means their income is fixed for life.
So where do British pensioners turn their eyes to when planning retirement abroad? A poll by MGM Advantage revealed it’s mainly continental Europe: Ireland appears in 4th place, France in second and Spain wins the top position. Germany comes in 10th place together with Portugal.
The choice of Spain is not based merely upon economical arguments. A study by Numbeo ranks Portugal as the cheapest country where to live, followed by the US, and then Spain, Germany, Cyprus, Canada, Italy, France, Ireland, New Zealand and Australia.