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Retirement today may be seen as a beginning, a time for new adventures, a time to do something different. One option that Australians may choose is retiring to live overseas.
Retirement overseas has emerged as a real consideration for some, with the lure of tropical climates, new experiences and a cheaper way of life. Research, such as the Global Retirement Index,1 is devoted to crunching the financial, health, lifestyle and governance numbers to highlight where retirees can spend a lot less money, and get a whole lot more.
If you do decide to take the plunge and retire to live overseas, there are a number of practical considerations you need to weigh up to make sure everything stacks up financially.
The Australian Tax office2 states there are a number of actions to consider if you leave Australia. It says that if you are an Australian citizen or permanent resident heading overseas, your super remains subject to the same rules, even if you are leaving Australia permanently. This means you cannot access your super until you reach preservation age and retire, or satisfy another condition of release.
Also, ensure that you keep your contact details current with your Fund. If you’re a member of QSuper you can do that via Member Online. You may wish to go paperless to help ensure faster delivery.
The Age Pension is payable when you’re living overseas. The Australian Government Department of Human Services3 explains that you can normally get the Age Pension while you’re travelling outside Australia and if you live in another country for a while.
Based on current rules, when you leave to live in another country, you’ll get an outside Australia rate, and your Pension Supplement will drop to the basic rate and your Energy Supplement will stop.
Other factors that may impact your payment rate may include:
Check the full details that may apply to you on the Department of Human Services website.
Get all your paperwork in order for your chosen country. Some countries have dedicated retirement visas while with other countries it may be a more general long-stay visa. Some general information and links are available on the Department of Foreign Affairs and Trade website.
Leaving Australia to live overseas may have tax implications.
You may wish to seek financial advice to navigate the capital gains tax and tax treatment of any income and assets in the country you are retiring to.
Many countries do have a double tax treaty with Australia that means tax will only ever be levied by one Government, but it always pays to check the legislation and rules around your move.
The ATO explains residency affects your tax return as there are tax implications depending on whether you remain an Australian resident or foreign resident.
In some countries foreigners aren’t allowed to buy property. Before you commit all your lifesavings to an overseas move, check what the rules are around relocating and investigate the property tax laws of the country you want to retire to. You may also like to examine the best value for money real estate options for foreign investors.
You may also want to ensure you have a back-up plan in place. If political unrest, natural disaster or a health crisis for example meant you had to pack up and move back to Australia, would you be able to afford to get back into the housing market?
Factor healthcare costs into your budget. The Department of Human Services explains Australians citizens living abroad for more than five years and permanent residents living overseas for more than 12 months forfeit the right to Medicare benefits. You would also be exempt from paying the Medicare levy.
In some countries you may be able to access public healthcare for a minimal cost. Find out more about Reciprocal Health Care Agreements. You may also consider health insurance in your chosen country or international travel insurance through an Australian provider.
Take control of your finances with the support of financial advice.
Have the confidence that comes from working with a financial adviser4 to help you reach your financial goals.
Book a consultation
1. International Living, The World’s best Places to Retire in 2019, 1 January 2019, at internationalliving.com/the-best-places-to-retire
2. Australian Tax Office, When you leave Australia, updated 31 May 2019, accessed 31 October 2019 at ato.gov.au
3. Australian Government, Department of Human Services, If you travel outside Australia, updated 9 October 2019, accessed 3 November 2019 at humanservices.gov.au
4. QInvest Limited (ABN 35 063 511 580, AFSL 238274) is a separate legal entity responsible for the financial services it provides. For Income and Accumulation account members who receive personal financial advice from QInvest, the QSuper Board may pay for some or all the advice fee for advice related to your QSuper benefit. Eligibility conditions apply. Refer to the Financial Services Guide for more information.
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