Nearly a third of retired expats have confessed that their pensions do not pay enough cash to provide the lifestyle they really want.
Just over half who are still working have also realised they are spending too much and will have to drastically cut back once they stop working.
Despite their retirement saving issues, 47% still consider they can fund a better lifestyle if they remain overseas, while only 18% believe their finances would improve if they returned home to Britain.
The main worry about going home for expats is that cost of living is higher than in many other nations. Three-quarters of expats voiced the worry – with only a quarter feeling that living costs in the place where they lived outstripped that in the UK.
The views were expressed in a survey of retirement expectations of more than 1,100 expats by Lloyds Bank International.
Another major concern for expats is currency exchange rate fluctuations.
Half of retired expats overseas were concerned how exchange rates affected their spending power.
The study found retired expats in Eurozone nations lost a significant amount of pension income as Sterling fell against the euro.
Emiko Caerlewy-Smith, of Lloyds TSB International, said: “Expats are really worried about a growing pension gap between how much they thought they would have to spend once they retired against how much they actually have.
“The problem is particularly acute for British workers who have retired abroad but left a pension in the UK that pays in Sterling when they have to pay their bills in a local currency. They continually have to check exchange rates and time their transfers to try to get value for money.”
Meanwhile, many of these British expats do not realise that they can transfer their UK-based pensions into a Qualifying Recognised Overseas Pension Scheme (QROPS).
One of the key features of a QROPS is that the pension can pay out directly in a number of major currencies to avoid currency exchange rate fluctuation problems and the cost of middlemen like banks and FX specialists.
The facility is available even if the QROPS is based in a different country from where the retiree lives.
Arranging the transfer of a UK-based pension into a QROPS is relatively straightforward and is managed by an international IFA with the appropriate regulation and experience.
QROPS also have other advantages for expats, like inheritance tax exemption, flexible investment options and the chance to take a larger tax-free lump sum amount.