Don’t let the sun go down on your overseas retirement dream

Older holidaymakers returning home with plans to retire to their favourite overseas destination must make regular financial healthchecks an absolute priority if their dream of a prosperous retirement in the sun is not to turn into an impoverished nightmare, warns online investment funds analyst Moneyspider.com.

The end of the holiday season can be a powerful catalyst for change and it’s likely that many couples returning from their regular holiday haunt this year will be making plans to move there permanently.

But the enduring strength of the euro against the pound coupled with plummeting house prices and high inflation could mean that financial plans made in recent years may not be sufficient to fund the lifestyle they have envisaged.

“Unfortunately for those who have now reached the age when they can make their overseas retirement dream a reality, the days of cheap living in the sun are on the way out,” says Moneyspider.com’s Tony Ahearne.

“The gap between the cost of everyday living in the UK and abroad is gradually closing – food and drink, for example, simply cost more these days because of the weakness of the pound against the euro.

“And with house prices still tumbling, those who had intended to live off the income from the investment of the equity from the sale of their UK property are not going to realise the sums they were expecting.

“But there’s no reason why anyone with sufficient funds to invest shouldn’t enjoy a happy, secure retirement overseas – if they have a watertight back up plan that ensures their money is working as hard as it possibly can,” adds Ahearne.

“The simple answer is to stay in control of your investments yourself rather than rely on a third party.

“Most importantly, keep your eye on the ball. As we all know, investments can go down as well as up so regular checks on how your funds are performing are crucial.”

Allowing money to languish in underperforming funds can result in losses of tens of thousands of pounds and a premature and stressful end to a happy and financially secure retirement. Just because a fund is a household name, it doesn’t necessarily follow that it’s the best option. Some of the leading Fund Managers have some of the worst performing funds.

For example, £10,000 invested in M&G’s best performing Global Basics fund five years ago would now be worth £26,670. But the same sum invested in their worst performing fund, Japan Smaller Companies, would have returned a miserly £10,330.

The massive boom in the overseas property market in recent years is one factor driving the growing exodus of UK pensioners to sunnier shores. Of the total UK population of 12.2m pensioners in 2010, 9.8 per cent are expected to spend their retirement abroad and by 2050 this number is predicted to swell to over three million, according to the Institute for Public Policy Research.

“Returning from holiday to a grey and windswept Britain still in the grip of the credit crunch may well be the final straw for a great many over 60s this summer,” says Ahearne.

“As long as they do a belt and braces check on their investments, there’s no reason why they shouldn’t look forward to a time when the holiday never ends.”

For more information, visit moneyspider.com