Retiring to the sun offers not just a more exciting retirement, but a cheaper one too. See how retirement planning overseas can make life more comfortable.
Cost of living is never far from the thoughts of retirees in the UK and US. Like most of the West, both countries have been plagued by inflation in recent years. Now Trump’s new tariffs are threatening to reverse any improvement. So what income do you really need to retire and could you get a better deal by moving to another country – and minimize the effects of wider global forces on your monthly outgoings?
Affordability is now one of the main drivers for the average British and American citizen choosing to retire abroad. A recent UK survey by a high street financial service provider showed that 36% of respondents aged 55 and over said they would retire abroad for a lower cost of living – only the weather (46%) incentivised people more.

Effective retirement planning overseas can be so relaxing!
Unsurprisingly, 70% of people believe it’s now harder to retire comfortably in the UK than ever before, according to research by Investing Reviews comparison site.
Across the pond, retirees are as keen as ever to move to foreign shores. The number of US ‘seniors’ receiving Social Security benefits outside of the US has jumped significantly in the past couple of decades – from fewer than 250,000 in 2003 to around 760,000 in 2024.
A survey of nearly 7,000 US retirees commissioned by CNBC last summer showed just how mobile today’s seniors are and how important affordability has become. One in three of them relocated in some form or other after retiring, with finding a location with lower costs of living (37%) the leading reason. Moving closer to family (36%) was also a key factor, followed by pursuing a better lifestyle (31%) and better weather (21%).
Retirement income in the UK & US
Working out your income and the lifestyle it could get you is key to retirement planning in the UK or US and overseas.
According to the Pensions and Lifetime Savings Association (PLSA), the recommended annual income a single person needs to retire and live a ‘minimum’ lifestyle in the UK is £14,400. This assumes you have no mortgage or rent to pay. You’ll need £31,300 for a ‘moderate’ lifestyle and £43,100 for a ‘comfortable’ one. Being a couple helps. The PLSA’s income for a retired couple living a minimum lifestyle is £22,400, or £43,100 for a moderate lifestyle and £59,000 for a comfortable one.
But do you really need so much? According to research by Legal & General and the Happiness Research Institute, the happiest retirees have an average monthly income of around £1,700 per month, or (£20,400 per year). This is achievable through combining your state pension (around £12,000) with annuity income from a pension pot of £222,000.
In the US, nearly 90% of people aged 65 and older receive social security payments, according to the Social Security Administration. The average monthly payment in December 2024 was $1,975, or $23,700 per year.
Including private pensions and other savings or investments, the median annual income of US retirees is $54,700 per year. (Census Bureau data).
Better value abroad
So how do retirees in Europe compare? Retired people in France need at least €15,000 to live ‘with dignity’, according to latest findings by Silver Alliance, an agency that helps elderly people in France. In Spain, the average annual state pension is now around €17,800 (€1,500 per month), with more than six million retirees receiving the highest rate of €19,800 (€1,650).
Be sensible and living like the locals and a single person should be able to live off €15,000 to €20,000 annually in these two countries, and indeed most European countries (assuming you have no mortgage or rent to pay, or expensive hobbies). Of course, a lavish lifestyle and expensive tastes will require a higher income.
However, in Spain a ‘retirement visa’ requires income in excess of €30,000 anyway, while an Italian retirement requires €38,000 for a couple. France and Portugal have considerably lower requirements.
Lower cost of living is key, life being cheaper abroad. The Your Overseas Home Cost of Living Index measures the cost of the same monthly outgoings in the UK (£1,996) against other popular expat countries. In the 2024 rankings, Spain is best value, being £701 cheaper than the UK each month. Italy is second cheapest (£544), followed by Portugal (£510), Greece (£506), Germany (£302), Ireland (£282), Canada (£215), Cyprus (£187), the US (£167) and France (£145). Australia and New Zealand were more expensive than the UK.
For US expats, a notable saving is the cost of healthcare. Private medical care tends to be cheaper in Europe, but signing up to local health services will save you even more. For British retirees in the EU, the S1 card from the Department of Work and Pensions should entitle you to the same level of state healthcare as local citizens. You can also dip in and out of private medical care as required.
Retirement planning overseas
Choose a destination carefully and you could complement lower living costs with a lower tax bill. Some European countries offer favourable tax schemes to newly arrived foreign retirees. For a set number of years, foreign retirees who move to Greece and Italy (southern regions only) can benefit from a 7% flat tax rate on all foreign sourced income and pensions. Italy also offers an annual flat tax amount for HNWIs who move there.

Don’t forget your overseas retirement plan
Foreign retirees in Cyprus have it even better. They can opt for a flat tax rate of 5%, with a tax-free allowance of €3,420, on foreign sourced income and pensions, or opt to be taxed according to the country’s scaled income tax bands, which means the first €19,500 is tax free. Take advantage of the cheaper living costs in these destinations and it’s easy to see the appeal compared to the UK and US.
To optimise your financial profile when retirement planning overseas, working with international wealth management specialists like Holborn Assets is advisable. Failing to realise or address tax-free allowances, such as ISAs and lump sum withdrawals from pensions, is an avoidable oversight, said Holborn Assets recently.