Thinking about retiring overseas?

Australia has become an increasingly expensive place to live, making the idea of retiring in a low-cost, overseas location more appealing.

In this article, we will explore the pros and cons and what you need to consider before making the move.

If you've recently spent time overseas, you’ve likely noticed how much further your Australian dollar can stretch, especially in Asia. An income that might be considered modest in Australia can support a very comfortable lifestyle in many overseas destinations. This is due to lower costs for food, transport, housing, and domestic services. Plus, these affordable lifestyles often come with beachside living and a tropical climate.

However, before turning your holiday destination into a permanent home, consider the following key steps:

1. First, Do a Trial Run

Living in a place is vastly different from going on holidays. So before making the move, spend between six to twelve months in your chosen location to ensure you’ll be happy, healthy, and safe.

During this trial period, ask yourself:

• How easy is it to make new friends? Are you comfortable being away from your relationships and life in Australia?

• What is day-to-day life like? Is the neighbourhood safe and secure? Are utilities and transport reliable?

• Do the local cultural expectations align with your lifestyle and values?

• What is the weather like year-round? Is it beneficial or harmful to any medical conditions you have?

• What are your legal rights? Can you rent or buy property, own a car, or get a driver’s license?

2. Check Visa Requirements

Visa requirements can be tricky.

So, research the visa you'll need for long-term residence in your chosen country and whether you can stay without becoming a resident. Many visas require regular renewal, and there might be limits on how often you can renew them.

If you're planning a permanent move, you might be able to apply for permanent residency, although this can be complex and time-consuming. Additionally, applying for residency abroad may affect your Australian residency for tax purposes, impacting your banking and superannuation payments.

3. Consider Medical Services and Costs

Access to healthcare is crucial, so evaluate the standard and cost of healthcare in your target country. Consider what would happen if you became critically ill. Ensure that any medication you require is legal and available in the new location.

Neither Medicare nor Australian private healthcare funds cover medical treatment overseas. While Australia has reciprocal healthcare agreements with some countries, in others, you will need to cover healthcare costs fully.

4. Assess Financial Implications

Plan how you will manage your superannuation and pension payments, and determine where and how you’ll handle your banking. Be aware of how fluctuating currency exchange rates might affect your income and its purchasing power.

While super pensions and lump-sum payments have tax concessions in Australia, this may not be the case in your new country. Understand local financial laws and tax implications to avoid legal issues or double taxation.

If you move overseas, you may still be eligible for an Australian Age Pension, but it could be less than what you’d receive in Australia.

A good resource to start your research is the Smart Traveller website.

How We Can Help

Retiring overseas can significantly impact your wellbeing, superannuation, Age Pension benefits, and tax obligations. While we've covered some considerations here, it's important to seek early, expert advice from professionals.

Contact us to discuss the financial implications based on your unique circumstances and goals.

Leandro Bonin is an adviser at Aspire Planning, authorised representative no. 001296409.