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Retirement Abroad – Foreign Exchange Considerations

Anyone who is considering retiring abroad in a different country from one in which they spent a period of their working life may need to repatriate funds to their new country of residence. If regular payments, such as an individual’s pension is required overseas, they need to be converted into a local currency this can be an expensive process without the help of an FCA (Financial Conduct Authority) regulated foreign exchange broker. 

How to Send Money to Spain Once You’ve Found Your Dream Property?

Although high street banks and other outlets offer money transfer services, they often charge relatively high fees and give poor value exchange rates. A specialist foreign exchange broker will not only keep fees to a minimum, but they will also provide the best possible exchange rates, ensuring client money is not wasted on unnecessary fees and charges.

It is important to exercise control over pension payments when converted into another currency because contributions have accrued for several years and it is likely that much work has gone into the selection of investments to ensure a pension that provides maximum benefits. Upon maturity, it would reverse years of hard work if charges and poor exchange rates reduced the value of a pension. Foreign exchange brokers are experts in their industry and will ensure that this scenario does not arise.

Case Study

John Champion 63, originally from Basingstoke, receives a monthly payment of £1,500, which requires conversion into Euros following his retirement to Spain. When offered a conversion rate of 1.1811 from a high street bank he sought the advice of a specialist broker who was able to provide a rate of 1.2075. This raised the value of his pension payment from €1,771.65 to €1,811.25. Whilst the increase in the value of €39.60 represents a gain of 2.2% the gain is worth €475.20 to John on an annual basis, all because he was willing to seek the services of a specialist broker.
It is possible to set up a recurring payment scheme with a broker so that the stress of worrying about exchange rates is eliminated. The service can be extended to cover regular payments such as wages or school fees. A specialist broker can also be used if a lump sum is being invested and a currency exchange is required. It is especially important not to create a drain on pension resources through inefficient use of exchange rates because to maximize the value of an investment it is necessary to protect its capital value.
Retiring overseas – other types of money transfers.

Related:  International Business Payments

Overseas property deposits & final payments

Those who find themselves able to retire and relax in the sun will typically chose to purchase and overseas property. Popular destinations include France, Spain, Italy and Cyprus.

Dependant on the project and property type their will typically be a payable deposit and final purchase payment. Alternatively, if your retirement property is purchased off-plan you will normally need to transfer ever-increasing amounts as the projects nears its completion.

A foreign exchange provider will help you develop a strategy to capitalise when the currency pair you are exchanging improves and protect you if it decreases in value. If the rate is already advantageous you can fix an exchange rate for a deliverable date in the future, for example when your property completes. Compared to banks foreign exchange brokers offer many more types of foreign exchange contracts to complement your budget, timeframe and objectives.

Overseas property renovation transfers

Once you are settled into your new overseas retirement property you will almost certainly want to tailor it to your tastes. This may include redecoration, the addition of a swimming pool or complete top to bottom renovation.
A foreign exchange broker will be very able to assist with small transfers to get the property in great order, they are unlikely to charge a transfer fee and can advise if your builder works on stage payments.

Transfer of wealth to invest overseas

If you feel that you are unlikely to move back to home and prefer to live out the rest of your days overseas you may wish to transfer any residual wealth to your country of retirement. This could include a lump sum pension payment, transfer of savings or a rental property sale.
You may wish to lodge money in your overseas bank account, purchase additional property or make a foreign investment.
Your foreign exchange broker can assist with foreign exchange transfers relating to your upcoming overseas transfer of wealth and advise on the best course of action.

Related:  Need to Make a Major Transfer of Money Abroad? These Factors Will Affect the Rate

Returning home from overseas retirement

Whilst many won’t look back or feel the slightest bit homesick, some retirees elect to return to their country of origin. This could be due to the inability to adjust to a new climate or language or could just be because they miss home. Foreign exchange brokers acknowledge that many retirees return and can help time the transfers of currency repatriations, in line with the sale of foreign property. Many brokers can arrange for the transfers to be sent directly from the solicitor or notary dealing with the sale, meaning funds are sent prompt rather than being stuck in an inaccessible bank account or solicitor’s segregated account.
Funds will typically take a few days to clear meaning you can exchange the money once back in your home country. Clients benefit from the full array of foreign exchange contract available as per when they purchased the overseas property.

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