How should you organise your retirement to Spain? Retirement abroad is increasingly popular with over one million British expats having their pension paid overseas.
It is less common for citizens of the US to retire abroad, but there are around 550,000 Americans who receive their social security benefits abroad.
As an EU citizen no visa is required for Britons to retire to Spain. The impact of Brexit will only be clear once negotiations have progressed.
Non-EU citizens can obtain a Long Stay visa for retirement in Spain, which allows you to reside without working or doing any lucrative activities. You will need to have a passport valid of one year, medical certificate confirming you have no contagious diseases, proof that you have the financial means to support yourself (and any accompanying family) without the need to work.
RENT OR BUY
There are many issues to be considered when deciding whether to rent or buy your home in Spain. Rental arrangements allow for greater flexibility if you suddenly need to return to your home country for unexpected reasons (such as health or family issues). It can be sensible to rent initially even if you plan to buy so that you can get to know the area and experience the lifestyle before committing to buying a property. This also allows you to really know the local property market and be sure you have chosen the right location.
Buying your property gives a greater security and allows you to see this as your home with the freedom to do what you want to your home. Whatever the current market conditions, there is always the risk of the market falling and leaving you unable to sell in the short term until the market recovers. Provided you do not intend to leave this will not be a problem, but if you feel you may decide to return home this is a risk to consider.
When planning your retirement anywhere you will need to know what funds will be available to you. This may include personal and state pensions or social security benefits.
You should be sent a claim form 4 months before you reach your State Pension age. Contact the International Pension Centre (IPC) if you haven’t received a letter 3 months before you reach State Pension age.
If you’ve worked in the UK and abroad, you will need to send the international claim form to the IPC.
You can contact the IPC by email or phone, or fill in the international claim form. You’ll need the international bank account number (IBAN) and bank identification code (BIC) numbers for your overseas account.
The Pension Service 11
Mail Handling Site A
The Basic State Pension for 2017/18 will be £159.55 a week for a single person provided you have made a minimum of 30 years’ National Insurance contributions during your working life. You can claim this wherever you live once you qualify for the UK state pension. The pension can be paid into a UK bank or directly into an overseas account in the local currency (saving transfer fees and bank charges). You can choose to be paid every four or 13 weeks, but if your State Pension is under £5 per week, you’ll be paid once a year in December.
If you work abroad before retirement it may be possible to receive the state pension from more than one country.
If you have retired early, or have yet to start drawing a pension, there is the possibility of moving your pension pot overseas. You can do this by transferring it to a Qualifying Recognised Overseas Pension Scheme (QROPS). These can be based in the new country you are moving to, or set up on an offshore basis. They offer increased flexibility and, once you have been a non-UK resident for five years, are outside the UK tax net. The income from QROPS may also be taxed favourably in your country of residence. Advice should be sought from a specialist IFA before doing this.
In Spain a lump sum withdrawn from your pension may be treated as taxable income, so it may be better to leave the money invested.
If you decide to return to the UK you will need to call HMRC’s Residency Helpline.
US SOCIAL SECURITY BENEFITS
If you are thinking about retiring abroad, find out if you can receive your Social Security or other federal agency benefits outside the United States. The Social Security Administration’s Office of International Operations (OIO) provides such information, and consular officers at the nearest U.S. embassy or consulate can also assist you.
You can have US Social Security Benefits paid while living outside the US. You can find a guide at http://www.socialsecurity.gov/retirement/retirement.htm
GETTING THE BEST OUT OF YOUR RETIREMENT IN SPAIN
You will know what it is about Spain that has attracted you to retire there, but you should be clear on how you plan to spend your time. As with retirement anywhere you cannot approach it as an extended holiday. You may have spent time in your intended new home area, but have you been there out of season. Consider what you will do when the weather is not as reliable.
There are many other expats living in Spain and many clubs around the country, including cricket clubs, American Women’s Clubs and many more. Getting involved with such clubs can be a great way to meet people with similar interests, but there will also be popular bars, restaurants, golf clubs, gyms and other places where as a regular visitor you will soon meet other long term residents.
Ensuring that you have adequate healthcare is an important consideration for everyone as they get older. The Spanish state health service establishes that all people, regardless of their nationality, have the right to health care. The National Health Service (NHS) is available for Spanish nationals as well as foreigners, who work in Spain and are registered and contribute to the Spanish Social Security System. This also applies to foreigners, who have retired from that system, or for those who work or have worked in an EU country or other country with whom Spain has a Social Security treaty that covers health care.
There is generally a health centre or ambulatorio, within each neighbourhood, where there is a general practitioner and a paediatrician. To see a physician, you must make an appointment. If a specialist is necessary, the general practitioner must refer you for care.
An alternative to the state health care system is private medical treatment. Through this system you can select any physician you wish. You can also consult with a specialist without a recommendation from a general practitioner. With private health insurance, you generally pay the physician directly and then apply for reimbursement with your insurance company.