It is all very well talking about the wonderful lifestyle in Spain but we had to think very carefully about whether or not we could afford to live in this paradise in our new semi-retired state. We had to think not only about our level of income now but also in the future. My income is fixed and in fact might even fall if the stock markets fail to rally a bit in the future. Julian’s pension is index linked but it dies with him unless the EU rules concerning transfer of pension rights between unmarried partners who are financially dependent on each other are changed.

Obviously we also built into our sums the fact that at some point we will be able to add the UK state pension to our income forecast. It is necessary to consider future potential income at the same time as thinking about the cost of living.

LIVING WELL AND CHEAPLY

Experience has now shown that the cost of living in Spain is considerably lower than in the UK, especially if you choose to live like the locals. If you own your home and have no debts it is surprising how little money you need to survive, and if your income is reasonable you will find that you can live very well in Spain.

Property is cheap compared to most parts of the UK. Even if you choose to rent rather than buy, rents are much lower. Food is definitely cheaper but we have found that if you want to buy some of the food items we were accustomed to in London, they can be very expensive since they have to be imported. Wine and other alcoholic drinks are considerably cheaper and cigarettes are half the price one has to pay in the UK. We rapidly learned that Spain is not one of the world’s larger producers of beef so beef is expensive but if you enjoy pork and chicken they are much less expensive than in the UK. All types of pasta and rice are cheaper, as well as fruit and veg, which keeps down our cost of living.

Our bills here are around half the London cost for cooking and water heating. Gas is bottled and it is certainly cheaper. A gas bottle costs us around £7 and even when we were cooking and heating water using gas in our first apartment a gas bottle lasted up to six weeks.

As I explained earlier we have found the cost of eating out much lower, especially if you go to restaurants which are favoured by the local Spanish population. If you go to smart restaurants aimed at holidaymakers the bills can be almost as high as in London. The problem is that many of these restaurants are run by expats for the British and they tend to charge what they would have charged back home. The customers often do not bother to check out the Spanish restaurants to discover that they could be eating out a lot cheaper.

We have found that house insurance, car insurance and, as discussed later, health insurance are all much cheaper than in London. We also save money on car repairs and maintenance and household repairs so long as we take on the services of Spanish tradesmen. Even with a new Spanish bought car from a mainstream dealer the servicing costs are a fraction of those in the UK.

WHAT COSTS MORE?

So Spain sounds like a paradise – is anything more expensive? Quality clothing is probably more expensive than the equivalent in the UK, although if you live on the coast you tend not to wear very smart clothes. For most of the year we live in shorts and t-shirts and wear sandals bought in the market or in the hypermarket for a few euros.

Since we first moved to Spain relative prices have changed. Initially we thought that almost everything we looked at was cheaper than we were accustomed to but at that time the pound was strong and the euro was weak. That situation is changing and the euro has gained almost 12 per cent against the pound, which means that real prices are 12 per cent higher compared to sterling. Unfortunately most of our income is in sterling so we have to take this into account and it is probably the only real worry we have for the long term. A major reduction in the value of the pound could seriously affect our disposable income.

It is impossible to state that the cost of living is x times lower than in the UK since the cost of living is dependent on what each individual chooses to buy. I can, however, say that there are many expatriate pensioners who own a property in Spain and manage on the UK state pension. They may not be living in the lap of luxury but they do have a better lifestyle on a relatively low income than they would have had if they had chosen to remain in the UK.