Millions of us dream about spending our golden years somewhere warmer, more comfortable and less stressful than the UK. However, as a new report warns, the economic crisis means that retiring to the sun has become decidedly more expensive, and less comfortable over the last five years. In fact, the average pensioner has found themselves €145.20 a month worse off over that time.
So what has gone wrong, and what can people do to protect their income?
DroppingA report from HiFX found that the UK's 1 million pensioners who have retired overseas have missed out on a combined total of £10.6 billion.
This is due purely to the exchange rate, as the value of the pound has dropped significantly against a number of major currencies. British pensioners living overseas have their state pension paid in sterling and have to convert it each month. As a result, their monthly income has been gradually dwindling.
WorstThe currency firm analysed the top 13 countries where British expat pensioners live. They found that an expat pensioner living in the Eurozone could have seen their monthly pension income drop €145.20.
Mark Bodega, Director at currency specialists HiFX, said: "For those in Europe, the days of €1.3 - €1.5 against sterling are now over, €1.2 against sterling would now be seen as high. However, pensioners in Switzerland have not only taken the biggest hit in terms of their state income, Switzerland is also notoriously expensive and has high living costs, so pensioners hit will have been struck from both sides."
Other countries where pensioners are taking a big hit are Australia, where the monthly income has fallen 444.4 Australian Dollars, and New Zealand where it has dropped 431.2 New Zealand Dollars.
So what can they do?There's nothing pensioners can do to halt the slide. However, they can fix their exchange rate for between six months and a year. Many currency companies offer what they call regular payment services. They fix the exchange rate - this may well not be as generous as the current rate but will eliminate the risk of it dropping further. They will then take your state pension out of your UK bank account by direct debit, convert it and transfer it to your account overseas.
Those who are uneasy about fixing the exchange rate for up to 12 months and are more hopeful about sterling's future should at the very least shop around for better exchange rates and compare the rates offered by their high street bank with a currency specialist. Often the rates available online compete keenly with those offered by the major banks, so it's worth checking out what's on offer.
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