If you’re thinking of retiring soon, where you intend to settle down and spend your retirement years could be a key part of your planning.
As an advice company with offices in both Australia and the UK, we are very much aware of the decision some of our clients have faced, or will face, when it comes to deciding which of the two countries to settle in after a lifetime of working.
For example, many have moved between the two countries and have experienced life in both, as well as accrued financial interests and assets in both.
So, read on to discover some of the important considerations and issues that could have a bearing on your decision-making when choosing where to retire.
Family issues could affect your choice of where to retire
Given the importance of choosing where to retire, and how it will impact your future wellbeing, it’s important to ensure that it is a joint decision with your spouse or partner.
It will be important to have an open discussion and take each other’s feelings into account.
In addition to your spouse or partner, you may also have to consider other family members when you are making your decision.
For example, you may have elderly relatives who could require care support that you may have a level of responsibility for arranging.
If you are an only child, much of this responsibility could fall on your shoulders and, as a result, may have an effect on where you will retire.
However, if you have siblings living in the same country as elderly relatives, it could make your decision-making easier. Bear in mind, however, the financial implications of caring for elderly relatives, and how you may want to share the cost.
Additionally, you will want to consider your own children and how your decision could affect them. Clearly, if they have left home and are no longer financially dependent on you, that will be less of an issue. But, if they are still living with you, or are still in full-time education, your plans will clearly need to take them into account.
Find out more: Facing up to future long-term care costs for your parents
You will want to consider the comparative cost of living in the UK and Australia
There is a common belief that the cost of living in Australia is cheaper than in the UK. However, in our experience, that isn’t necessarily the case.
As you may have read in a previous article we produced, it’s difficult to quantify, as there are vast differences depending on which areas of the UK and Australia you compare.
Property prices are generally more expensive in Australia, although there are obviously geographic variations, while eating out is cheaper in Australia.
You may also want to factor in healthcare costs. In your retirement years, you may well be increasingly conscious of the state of your health, and the potential for a long-term illness to affect your enjoyment of your retirement years.
As a result, access to healthcare will be an important issue, and the comparative healthcare systems and cost of private arrangements may be an issue you will want to take into account.
You will also want to think about your current lifestyle and outgoings, and how that might change once you stop working.
Find out more: Comparing the cost of living in Australia and the UK
Don’t let the tax tail wag the dog
It can be tempting to consider the comparative tax systems in the UK and Australia, and for these to become a major consideration in your decision-making.
While it’s certainly an issue to bear in mind, our suggestion is not to let the tax tail wag the dog. In other words, taxation can be a consideration, but it shouldn’t be the overriding one.
Bear in mind it’s worth looking behind the headline rates and taking a more holistic point of view.
Perhaps more importantly, regardless of your perceived tax burden, there are effective ways to mitigate the amount of tax you pay, regardless of whether you are living in Australia or the UK.
Cashflow forecasting can help you make your decision
We have written before about cashflow forecasting and how, when it comes to helping you plan your financial future, it is one of the most effective tools we have.
In very simple terms, you input data about your finances and the software allows you to project what your financial future may look like.
We can also input external data, such as projected inflation rates and investment returns, to forecast how this could change over time.
You can then use this information to help you make highly informed decisions about your future, which can include where you want to live. Additionally, we can stress test any decisions you make, to ensure your plans are financially robust.
Cashflow forecasting of this kind is a relatively recent innovation. We have made full use of it in our UK office since the first forecasting tools became available and have found it really can help drive effective financial decision-making.
We have subsequently transitioned our UK experience to Australia and have been somewhat ahead of the curve in using it. Indeed, we worked with Voyant – who produces one of the leading modelling programmes – to come up with an Australian version.
Using cashflow forecasting can really help you when you are deciding on your retirement plans, including where you want to live.
You may be interested to know that we recently did a comparison of this kind for a client, and it showed they could happily retire in either country. This shows that often making the decision is one for the heart rather than financially based.
Importantly, you will have the reassurance of knowing that you are making your decision on where to live based on sound financial analysis and projections.
Get in touch
If you would like to talk about your retirement plans and where you want to retire, please get in touch with us.
Please note
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only, it does not take into account your personal objectives, financial situation, or needs. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.
All contents are based on our understanding of HMRC and ATO legislation, which is subject to change.
