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Retirement in Spain - easy with a little financial planning

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Thinking of retiring in Spain? No problem, so long as you keep a close watch on your finances, according to Tenerife News.

Spain has again held the top spot as the UK's most popular overseas property market - with 31.6 per cent of the property market according to Association of International Property Professionals - and expert opinion finds it's easy to retire in the sun with a little care in the finances department.

Tenerife News says that there are a number of ways to ensure that cash built up over a life-long career can be maintained abroad - and of course retirement is generally a good time to check over the finances.

The publication says: "Protecting your wealth in retirement is a key factor in living the lifestyle you dreamed of in Spain. Reviewing your financial arrangements will help to make sure that you do."

Things to budget for when considering retirement in Spain include the cost of maintaining the property, money with which to pursue pastimes and develop a social life, holidays abroad, a nest egg for emergencies and provision for children and grandchildren.

For those that have a regular income, in the form of, say, a state pension, it is important to move the income into other tax efficient vehicles that are more beneficial to Spanish residents.

Retirees living abroad who are claiming their pension through their UK bank can be charged anything between £10 and £30 per claim, plus a further charge at their host bank abroad. In total this can mean the average pensioner living abroad pays £300 a year extra to access their money, according to a recent study from HiFX. HiFX runs a regular payment scheme tailored for pensioners living abroad – one way to avoid these cumbersome exchange charges.

With inheritance tax and other forms of tax potentially sapping at savings, wealth preservation is another important issue. Tenerife News states that a tax efficient insurance bond, or ‘wrapper’, such as a Personal Portfolio Bond (PPB), is a good option – especially as in Spain a PPB attracts a very favourable tax treatment.

It said: "A PPB can shelter your investment from tax on income and capital gains and can roll up tax free and only withdrawals are taxed. If a PPB is placed in an offshore discretionary trust it can screen your wealth from inheritance tax."

Over a million UK pensioners have taken the decision to live abroad, with a large percentage of them in Spain.

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