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Easing Into Overseas Retirement

Date : May 05,2014
By : Luis da Silva

An increasing number of retirees and seniors close to retirement age want to move to warm, sunny locations. Money matters such as cost of living and tax, health, lifestyle and safety are high on the list of retiree priorities. This segment of the market prefers a location that offers a variety of activities, sporting options and natural beauty such as beaches, nature reserves, and walking and cycling trails. This group of people, which include millions of Baby Boomers, want to balance independence with access to necessary care and proximity to an international airport to allow them to stay in touch with loved ones. Importantly, they want to make their pensions stretch, and eliminate unnecessary costs and taxes.

For the majority of those who want to make a move overseas, the option is to buy a home abroad. This does beg the question: why would someone who has spent the majority of their working life paying off a mortgage, immediately tie up a large part of their available cash or take out another mortgage on entering retirement? Purchasing real estate is seen by many retirees as a ‘safe’ step, because they are reinvesting their hard-earned cash into real assets. While real estate is generally an excellent long-term investment, the fundamental difference between working and retired life is the question of predictability, which means that the ability to access cash in the case of an emergency becomes more important as age increases.

After, or even in the period leading up to retirement, as health costs increase, and with pensions lower than salaries, tying up a significant portion of wealth in fixed assets makes less and less sense. Many individuals argue that having assets which they can pass on to their next of kin, or a guarantee of a roof over their heads should any emergency occur, gives them peace of mind. However, this hides the fact that to achieve either objective often implies a large sacrifice in terms of the quality and standard of living. In many cases, those who invest in real estate have done so while still on a regular wage or salary, and have failed to account for the effects of a lower pension and higher healthcare costs. They may find themselves in a situation where a monthly shortfall of cash is difficult to make up if most of the capital is tied up in fixed assets.

Baby Boomers in general possess the financial muscle to choose their retirement location. Many are buying a retirement property away from home, severing all links with their home country or community without first experiencing their new life and seeing whether or notthey adapt to a new location and lifestyle.

The risksare varied: you may not like a new country or location,the lifestylemay not be right, making new friendsis not as easy as you think, healthcare concerns might be better resolved with your own doctor, you may miss the cultureback home or don’t get to see family as often as you would like, or you may simply not like the food.There is a need for flexible solutions for the 50+ market, especially for seniors migrating between countries or regions of the world.

Europe lags the USA, Australia and South Africa in independent living solutions for the 50+ market. There are almost no options available for those who do not wish to purchase real estate, except for renting an apartment or villa with few neighbours and little immediate local support.

To address this gap in the market, Senior Living Villages is launching one of Southern Europe’s first flexible rental and service-based solution whichsacrifices none of the advantages of a real estate purchase in a Mediterranean location. Well-kept private accommodation, comparable to a 4* hotel or condo, will provide a mix of comfort and quality. A range of multilingual medical services, including nursing, physiotherapy, doctor and pharmacist access, will be on offer. F&B options will be varied and include on-site restaurants where possible. The villages will create active communities for residents, who will have at their disposal a range of facilities and leisure activities.

Active seniors will be able to work from home, and family will be able to visit, staying either in their home or in separate, on or off-site accommodation. Residents can easily ‘trade’ up or down their size of property depending on their evolving needs. In case of an emergency requiring a return home, that flexibility will exist. If residents like their new lifestyle they will be able to buy a property, in some cases the home they are already in!

The Algarve has been chosenas the location for the pilot because it meets all the criteria that the 50+ market seeks in an international retirement destination.

New residents in Portugal will benefit from favourable legislation including the ability to receive pensions tax-free for a period of 10 years. Portugal has one of Western Europe’s lowest costs of living and one of its best climates, with more than 300 days of sunshine in the southern part of the country. The Mediterranean diet, with a strong focus on seasonal, fresh produce and where olive oil is used in abundance, is considered to be among the healthiest in the world. The country is Europe’s largest consumers of fish per capita, but the range of locally produced meat, from pork, to rabbit, to beef, is also extensive. There are a variety of cultural and sporting activities, not least of which because the country has been voted Europe’s best golfing destination, and plenty of activities linked to nature, including bird watching, sailing, kayaking, diving, walking, paragliding and flying, and many more.

The benefits of the solution being launched in Portugal are:

  • Tax efficient: no tax on pensions or foreign income for new residents.
  • Cost-effective: no property purchase means you spend money on yourself and your lifestyle. You always have the option of buying a home when you have settled in.
  • Choice: choose your accommodation type, services, meal options, leisure activities. Adapt as your needs change.
  • Flexibility: come to live permanently or stay for the winter.
  • Community: meet new people and make new friends. Settle into your new lifestyle.
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