Almost half of the aspiring expats are motivated to retire abroad as a result of COVID-19 travel restrictions inspiring them to travel more in later life, according to new research by PensionBee.  

However, the study also revealed most people worry about losing out on annual basic State Pension increases due to the UK's "frozen pension" policy.

The survey covered over 1,000 UK residents, aged between 18 - 73, who are planning to retire overseas to uncover their retirement plans; from their ideal destination and estimated pension savings, to how they are financially preparing for retirement and any potential future concerns.

The survey revealed 71%  admitted being concerned about extra fees or delays accessing their pensions abroad.

The majority of respondents agreed the most popular motivation for retiring overseas is to have "a better standard of living" followed by to "experience a different culture and country".

Other factors include "better weather", "property being more affordable", "lower taxes" and "better healthcare services".

The majority of wannabe expats also said they have saved or will save more towards their pension pot as a result of wanting to retire abroad.

Romi Savova, CEO at PensionBee, explained: "Moving abroad and managing a UK personal or workplace pension can seem like a daunting prospect, so it's encouraging to see that future expats are already thinking about how they need to prepare financially. Circumstances such as pension drawdown fees, fluctuations in exchange rates and living in a post-Brexit world perpetuate the need for savers to thoroughly research their dream retirement destination before making any firm decisions. This can help ease concerns around the cost of living abroad and the accessibility of a UK pension once a saver has started their retirement outside the UK."

PensionBee's survey indicated that one country was a clear winner with 34% of wannabe expats stating that they plan to retire to Spain. Not only a popular holiday destination, Spain already has approximately 750,000 British expatriates living there, with research highlighting that living costs are on average 28% cheaper than the UK.

The next most popular destination for future expats was France securing 17% of the vote, while the USA ranked as the third most desirable at 15%.

Spain proved to be a particularly tempting destination for Generation X (41 - 54 years old), polling at 40% in this age group, compared to 34% for Millenials (24 - 40 years old) and 25% for Generation Z (18 - 23 years old).

The next most popular destination for both Millennials and Generation X was France, recording a preference of 17% and 18% of respondents, respectively. However, Generation Z selected the USA as their next most popular location, with 20% of respondents revealing that they would consider or plan to emigrate here in their later years.

A recent survey by Which? found that households enjoying a comfortable retirement in the UK spend an average of £26,000 per year, but may need as much as £40,000 to afford a more "luxurious" retirement.

Determining a budget for retiring abroad is slightly more complex, as the amount needed differs from one country to the next. The above-mentioned £26,000 per year average will go further in countries like Spain where savers can benefit from cheaper properties, a reduced cost of living and lower taxes and health care rates. Whereas the USA, which was selected as one of the top three ideal retirement destinations by all three demographics, is known for expensive health insurance, higher property rental prices and costly food bills.

Regardless of the location, all retirees will be affected by the exchange rate between the pound and the local currency, with this fluctuation having an effect on the amount of pension savings paid into a UK or overseas bank account.

With this in mind, PensionBee asked survey respondents how they are currently budgeting and planning for their overseas retirement. The majority of respondents (66%) reported that they "have saved or will save more towards their pension pot as a result of wanting to retire abroad".

Unsurprisingly, Generation X, who are the closest to retirement, reported having the largest amount saved, with an average pot size of £39,594.67. Millennials trailed behind with an average pot size of £25,226.88, while Generation Z had on average £18,918.42 saved.

Top destinations Britons would like to retire to:

1. Spain

2. France

3. USA

4. Italy

5. Greece

6. Portugal

7. Canada

8. Dubai

9. Cyprus

10. Australia

To read the full report, click here.