If you’re thinking about retiring abroad and all you’ve thought about so far are the pros of such a move, some may accuse you of viewing your transition through rose coloured glasses.  Yes, things in the UK are pretty bleak at the moment, and no, we’re not just talking about the weather, but the grass isn’t always greener abroad you know!

Surely it’s far better to be a realist than a dreamer, and if you’re aware of the financial woes facing British retires living abroad at the moment, at the very worst you can decide whether this puts you off a move, and at best it will mean you can steel yourself against the financial issues or at least be prepared for them!

The financial woes that we’re talking about relate to fluctuating exchange rates and the fact that the pound has fallen quite spectacularly against the euro for example.

Not even taking in the past few days of dips for the pound against the euro, the Telegraph newspaper has reported that the average British pensioner living abroad in a country such as Spain, France or Cyprus is suffering significantly in terms of the weakened pound in which the vast majority receive their pension income.  According to the newspaper’s calculations, the average British expatriate pensioner is now EUR 200 worse off every single month – and according to predictions from HiFX the currency specialists, things are likely to get worse as the fundamentals supporting the pound’s position are weak.

If the pound continues its slide, the amount that British pensions who are living abroad have to play with will naturally decline.  When you’re living on a fixed income already and you have bills to pay each month, this makes it incredibly stressful for those thousands of individuals affected.  And if you’re contemplating a move overseas, you need to be well aware of this issue – because even if the pound recovers, the issue of fluctuating exchange rates is one that you will still have to face as long as you live abroad and receive your pension income in sterling.

If you’re looking at buying a property abroad and you want to try and protect yourself from any more declines, you could make use of a forward currency contract where you ‘buy’ your currency in advance for a given rate of exchange from a currency brokerage.  You’re only required to pay 10% up front, and you can secure the contract for up to a year in advance.  This can work well for some people.  But for those on a fixed income from their pension, there is little one can do in a climate such as this, except wait for fortunes to reverse and it to go back to the good old days when the pound was riding higher against currencies such as the euro and the dollar.