How to retire overseas (with the Age Pension)
Retirement | 7/08/2017 |
5 min read
Whether you’re looking for a sea change, a more comfortable lifestyle, or want to make the most of your superannuation savings, retiring overseas is an increasingly popular options for Australians. In 2013 an estimated 77,000 Australian retirees were living overseas. But where do you start, and what are the rules and regulations you need to be aware off.
Pick a country, any country
Knowing where you’d like to retire is an obvious starting point. When it comes to things like medical and social services the rules vary, and some countries are far more generous in what they’ll offer expat retires. But on a more fundamental level you’ll need to think about the sort of climate you’re after, the local language, the cost of living, and the rules surrounding residency.
South East Asia is close, offers a very affordable lifestyle, and has an established expat retirement community. Even moderate retirement savings can stretch a long way in countries like Malaysia, Thailand or the Philippines, and English is spoken widely enough to avoid most language barriers.
Alternatively, Spain has long been a favourite retirement destination for British residents, offers free health services, and has an agreement in place with Australia that allows you to claim Age Pension benefits.
If you’re looking for something a little more adventurous there’s Belize (formerly British Honduras), a small and stable banking center in the Caribbean with English as the official language. Obtaining residency is quick and easy, and the tropical scenery is postcard perfect.
To help get you started International Living have compiled their annual ‘Best Places to Retire’ list, which you can cross reference with the Expatistan cost of living calculator. The calculator allows you to compare everything from housing to medical costs between different cities, and while it’s not 100% accurate, it will help you compare costs between your current destination and that overseas city you’ve always dreamed of visiting.
Having access to affordable and reliable health care services is a major consideration when retiring overseas. International health Insurance is one option, but it can be very expensive.
Medicare is another option, and as long as you’re an Australian resident (for tax purposes) you can continue to use Medicare services in countries that have a reciprocal health care agreement. These agreements usually only cover essential medical treatment, and vary from country to country – you can read more here.
According to Australian Expat Investor, “You will usually require your Australian passport and a valid Medicare card [to receive treatment]. Depending on the country, you may need to pay for the health services upfront (and claim reimbursement after the event), or you may need to make a co-contribution to the cost of the treatment.”
Your Age Pension consideration
According to the Department of Human Services, Age Pension payments are transferable overseas, with similar rates of payment, and rules around income and assets. For a couple, that's slightly more than $30,000 a year on the full rate, but could be less if you plan on keeping your Australian home. In 2013, the government paid more than $749 million to retired Australians living overseas.
If you’re claiming any sort of Age Pension (or intend to at a later date) there are a couple of things to keep in mind.
Unless the country you’re moving to has an agreement with Australia, you’ll need to put in your claim for the Age Pension locally, and in many cases will need to prove residency here for two years before you qualify. If you’re already overseas, that means you’ll need to return home.
You can read more about which countries Australia has an agreement with, and how it may impact your Age Pension here.
Living between worlds
Retiring overseas is a major lifestyle change and shouldn’t be taken lightly, but there are other options that allow you to get a feel for oversees living without having to give up the comforts of home. Australian retirees who have lived in Australia for over 35 years can spend up to 6 months of the year abroad while continuing to receive their full pension payments.
In response, some Australians spend half the year overseas, and sub-let their home while they’re away. This helps them subsidise the cost of their overseas travel, while still maintaining their permanent home in Australia. There may be tax and Age Pension implications for these arrangements, so it’s worth talking to a financial planner or accountant before going ahead.
Whatever you decide, Australian retirees are increasingly looking at overseas options. Whether it’s the climate, the cost of living, or being closer to family, there’s a whole world of opportunity beyond your own backyard.
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