The very reliable source reported on 08.05.06 that according to a new survey one in five Britons and a third of Germans are considering retiring to Spain. Madrid based property consultants, King Sturge, have carried out the survey by interviewing 800 Britons and 800 Germans over 50. 22% of Britons said they were considering moving to Spain, while 35% of Germans said they had considered the same option.
High on the list of incentives, which are increasingly being offered by local estate agencies, are healthcare and social services facilities. The King Sturge report concluded that 44 % of Britons and 34 % of Germans said these would attract them to retire in Spain.
Reports circulating from a US financial planner indicate that 40% of those who retire aged 55 with over $1m need to return to work 5 years after they retire to fund their lifestyle. So to sustain your lifestyle in Spain will you really need more than $1m or £533,000? I know this may sound strange, but surely £1 m ($1.8m or €1.4m) is enough to retire on?
Experian, the UK credit agency, has reported that in the UK there are about 50,000 millionaires. Many hundreds more are added to this number annually. Let’s be clear, this sum has at its root an over performing property market where even a reasonable family house in the South East or North West of the UK can comfortably hit the magic number.
If you sell – having no mortgage to redeem or capital gains tax to pay - what level of income could you hope to receive if you invested your £1m? A financial adviser has indicated that the best way to work out how much money you need is to multiply your required income by 25. This would mean that your £1m would deliver you, subject to income tax, around £40,000 per annum.
Amazingly, many experts suggest that a retired couple will need at least £2m (€2.9m) in the bank to give themselves a pre-tax income of £80,000 - and that’s without the costs of acquiring the retirement apartment or villa in the sun.
Whether your nest egg has been accrued through canny pension contributions, the sale of a family business, shrewd property investments or an inheritance or two, we have identified below a series of likely expenses that you’ll need to factor into your retirement planning.
There has clearly been a boom in prices on the Spanish Costas, and whilst Spain continues to deliver great value for money, prices have risen. As anyone, who has been active in the property market anywhere in Europe over the last fifteen years, already knows, values can rise and fall and demand may be inconsistent. Above all a property, as the adage goes, is only “worth only what someone is prepared to pay for it”.
On the Costa del Sol a modest property will costs you from €350,000 (circa £235,000) for an apartment and from €450,000 (circa £304,000) for a villa. This will drop to €225,000 and €300,000 respectively on the Costa Blanca.
As a yardstick, in Spain, you should budget for purchase costs of approximately 10 to 12% on top of your agreed property purchase price. This will cover legal fees, plus expenses including notary public fees, land registry, stamp duty and VAT (called in Spain “ Impuesto sobre el Valor Añadido” or “IVA”) – which are set out in more detail below.
A property buyer is usually responsible for:
A usual breakdown for the buyer is as follows:
The costs of furnishing a three bedroomed home can obviously vary greatly, but to avoid the tortuous process of importing furniture from “home” budget in the region of €20,000.
For a three bed roomed apartment or villa – depending on whether you have you own heated pool and air conditioning - you will need to budget for the following domestic costs and expenses – these are obviously very general in nature and are affected by year round or temporary living and actual consumption:
Electricity - bi-monthly circa €200Gas - unless you receive gas directly you’ll purchase “ bombona” from a delivery van these are around €12.50 each and may last a week or two depending on consumption.
Water - from around €70.00 per month depending on consumption and supply.
Telephone – A relatively modestly used combined fixed line telephone and ADSL will cost circa €75.00 per month. A mobile phone whilst useful can be maintained on a pay as you go arrangement with recharges available in most petrol stations and supermarkets from as little as €10.00 per recharge.
Green fees – Depending on your budget, membership of various Golf Clubs can be purchased. However, if you are not planning to play that regularly healthy savings can be made by purchasing green times from intermediary sales businesses that bulk buy green times and sell them on at discounts. On the Costa del Sol saving can range from 15% to 25% of the usual green fees as charged by the Club.
Gym Membership – depending on the facilities - €50 per person per month seems usual.Health bills – an all inclusive private health policy can be obtained for around €75 per person per month.
Cars - A car is essential in most regions – other than City centres. A good vehicle will cost circa €20,000. Monthly running costs, depending on fuel consumption, but including insurance and local car tax will be around €200.00.
Shopping Basket – by purchasing from Spanish run supermarkets, such as Mercadona, where quality is very good and prices are very competitive the basic “basket” will costs a couple around €50.00 per week.
Leisure – this can really be “how long is a piece of string?” but you can still eat out well for around €30.00 per head in the more touristy areas and for as little as €10.00 per head “up country”.
So …. Is retirement to the Spanish Sun an option that deserves careful consideration? For many thousands per year Spain ticks all the boxes and delivers a treasured lifestyle that is really second to none.
© The Rights Group SL 2006 (Marbella)Mark FR Wilkins
+34 600 343 917
Please note that the information provided in this article is of a general interest nature and intended as a basic outline only. You are well advised to contact a professional for advice specific to your circumstances. Nothing contained in this article should be seen or taken as the writer or publisher providing legal or financial advice.