Living overseas cuts retirement costs, says bank study

The massive cost of retirement in the UK is encouraging more Brits to retire abroad, says a study by Alliance and Leicester International.

The bank has calculated the cost of retirement in the UK is about £400,000 and many Brits look to move abroad to cut the cost and have a higher standard of living.

Almost 90% (88%) of British expats already retire abroad - with France (18%) and Spain (12%) the most popular places in the sun.

Expats want to stay close to family and friends

The stumbling point for most retirees is staying close to families and friends in the UK that leads to 57% of Brits staying in Europe. 

Funding retirement comes from savings (27%), the state pension (23%) and private pensions (20%), says the ALIL study.

Property is also a key factor with 6% of expats relying on rental income entirely, another 6% planning to sell buy-to-let property and 2% looking to equity release.  Equity release may soon not be an option as yet another provider - The Prudential - pulled out of the market today.

Retirement destinations are chosen because they provide a better lifestyle (21%), better weather (20%) and a lower cost of living (14%).

Low cost flights part of the plan

Lynette Byrne, head of marketing at Alliance & Leicester International, said: “It is interesting to see that many UK expats have settled in their new home, with 88% of UK expats intending to retire abroad. 

“However, while some Expats might prefer life outside the UK, they are still very attached to friends and family thus settling in European destinations that are only a low cost flight away.

“This research really highlights the international nature of society today and raises some interesting questions as to how people are going to manage their finances and protect their savings against interest rate fluctuations.”