Spain has topped a list of the most popular retirement destinations overseas, as experts warned living outside of the European Union could result in your pension being cut in half. 

The latest retirement hot spots index by financial services group Standard Life revealed :-

1st   Spain
2nd France
3rd  America
4th  Canada
5th  Ireland

Andrew Tully, senior pensions policy manager at Standard Life, said: “Retiring abroad is a dream for many people but without careful planning and advice, things can potentially go wrong very quickly.”

If an individual moves abroad permanently, any increases in their UK state pension will only apply if they are living in an European economic area – including Gibraltar and Switzerland – or a country with a reciprocal social security agreement with Britain.

People living outside these areas will see their state pension frozen at the amount initially paid when they first claimed.  Popular retirement countries outside these reciprocal agreements include Australia, Canada, New Zealand and South Africa.  It means the basic state pension could halve in real terms during a 20-year retirement, according to Standard Life.

This factor needs needs to be considering a retirement Overseas as if there isn’t a reciprocal agreement in place, then you need to be very careful your retirement income is sufficient to cover your living costs over a long period of time.”

Filed under: Overseas Property