Anyone thinking seriously of retiring to France (or indeed any other country) would do well to consult a professional dealing in taxation and property issues beforehand. This should give you sound and up-to-date advice, ensuring the right amount of tax is being paid in the right country and reducing the likelihood of nasty, unseen expenses unexpectedly cropping up.
This guide is not exhaustive, but it will give you a starting point. So, what do you need to know about the cost of living in France?
Firstly, be aware that residents of France are liable for tax on their worldwide income, so a pension being drawn in another country would need to be declared in France. France does have a double taxation agreement with a number of other countries, including EU member states, so that tax paid in one country acts as a credit in the other.
You would also need to investigate your pension arrangements before moving to France. Aim to inform the Department of Social Security a few weeks before you intend to depart, so that the necessary administrative process can begin.
Mark O'Sullivan, head of trading at Currencies Direct, comments “To handle your day-to-day finances you will need to open a bank account, a relatively simple process in France. Of course, if you are planning on spending the majority of your time in France you will need to make regular payments, such as your pension, to your French bank account in order to cover your living expenses. It is vital that people take the time to research the options available for these regular payments to ensure that they are not paying monthly commission and transfer fees, and are also receiving the best available exchange rate.”
"People who have a dream of retiring to France really should place their finances at the top of their plan. In my experience, people tend to get carried away with the dream and overlook a number of cost factors when they are budgeting for a retirement overseas. Unfortunately this can often result in people not enjoying their new life as much as they had hoped for. We would always advise people to put together a realistic property price bracket before they even begin viewing properties and make sure that they stick to this come what may. A good way to ensure you know exactly what you are able to afford in euros is by taking advantage of the forward contract service many foreign exchange specialists offer, enabling you to fix a currency rate for up to two years, effectively protecting you against major currency fluctuations.” he continues.
As you retire and draw your final salary, the day-to-day cost of living becomes ever more important. Creating a yearly plan of unavoidable outgoing costs and taking the time to shop around for the best deals could potentially save hundreds of valuable euros.
Alongside a yearly budget plan it makes great sense to have an emergency reserve of cash within the plan to cover unexpected costs. Also, any financial plan for an overseas retirement should include a realistic calculation of the costs of running your new property i.e. what are the maintenance costs? Is there likely to be service costs?
Regardless of where you move, although it may sound unromantic, retiring overseas is not only about tasting fine wines and strolling through orangeries. By thinking about the serious issues in advance you can avoid the common pitfalls and enjoy every penny and every moment of what you have worked so hard to earn.