Should I retire overseas?

A growing trend

According to data from the Australian Bureau of Statistics (ABS), more than 9,000 Australians aged 65+ opted to retire overseas in 2018–19, the last full financial year before COVID hit. This was up 18% on the previous year and up 66% over the decade. The pandemic slowed things down, but numbers are on the rise again. Despite changes in health insurance or access to a universal healthcare system, plenty are choosing to spend their retirement outside Australia.

Portugal, Mexico, Panama, Equador and Spain are some of the most popular destinations for retirees, but expat communities are also swelling in Thailand, Malaysia, Bali, Cambodia, France and Italy.

It’s easy to appreciate the financial incentives. If retirement finds you short-changed in Australia, your savings could last longer in a country where the cost of living is lower.

“We all look after each other”

Former nurse Cheryl Fankhauser, 70, is part of a friendly expat community in Malaysia who all “look after each other”. Originally from Tweed Heads, NSW, Cheryl returned home after three years teaching English in China and decided it was time to retire.

“I owned a house in Tweed Heads, but by the time I paid insurance, tax and rates, I couldn’t afford to retire there,” says Cheryl. Now she rents out her Tweed Heads home and investment properties and lives comfortably, paying A$600 a month rent for an apartment in an upmarket area of historic George Town.

“Healthcare in Malaysia is first class,” she says. “Aged care is not well developed, but it is cheap to bring in a 24-hour carer.”

A better quality of life

When Norah Ohrt sold her art gallery in Perth more than a decade ago, she soon realised there was no way a single pension and her small amount of superannuation would cover even a small one-bedroom apartment in the area where she wanted to live.

“If I had retired in Australia, I would not have been able to afford to go to the theatre, to go to films, to eat lamb and beef, to have expensive heating in my house,” says Norah. “To me, that is not how pensioners should have to live.”

Norah, 79, had fond memories of a year spent in Madrid in the 1960s when she was young, so she did a little investigating on the internet. “I looked at the prices of houses in Spain and realised I could afford to buy something there that was really very nice.”

After looking at 15 houses for sale online, Norah found the home she wanted in Martos, overlooking olive groves in Southern Spain. “I knew Martos and felt I could very happily live there, so I came for a short visit and I bought the house.” 

She bought the three-bedroom, two-bathroom house outright for A$60,000 and spent a further A$40,000 renovating it. She successfully applied for a Spanish visa and organised for her Australian pension to be paid directly into a local bank. She even arranged for her two Abyssinian cats to move to Spain with her. 

“Here I can afford the lifestyle that I had in Australia when I was working,” says Norah. “I entertain my friends, I can go out and buy a case of wine, I can buy all sorts of meats that I want to buy, I can do everything I want to do,” she says. 

“The hardest thing was leaving my friends in Australia, but they have all come to visit me here; many of them have been here three or four times.” 

Before you leave

While making an exotic location your new home may sound enticing, there are a few reasons to look before you leap. Financial, health, lifestyle and government implications can differ widely depending on where you go.

Accessing the Australian pension while living overseas depends on several factors, such as the length of time away, a change in assets and income, and if the Age Pension can be paid via a social security agreement with another country.

Depending on your country of residence and how long you’ve lived there, you may be eligible to split the Age Pension between Australia and your host nation, but penalties can apply if you want to return to Australia permanently after living abroad.

Travelling outside of the country for as little as six weeks within two years of returning could result in payments being cut. If you’re planning on maintaining income through working while overseas, tax will also be a consideration.

Healthcare a major consideration

Health is another significant factor. Australian citizens living abroad for more than five years, and permanent residents living overseas for longer than 12 months, forfeit their right to Medicare payments.

While healthcare procedures can be cheaper in some countries, Australia has highly developed aged care services, so if you’re planning to live out your days overseas, it pays to check how your proposed destination compares.

“Spain is ranked as having one of the best health care services in the world, and private health cover is affordable,” says Norah. “I pay just over €2,000 (A$3,275) a year, so if I go to hospital or to the doctor, I don’t have anything extra to pay. It covers absolutely every penny and that’s for specialists, surgery, x-rays, everything.”

Norah’s biggest challenge, she says, was learning Spanish. Now she is fluent and a whole new circle of friends has opened up for her. “I have no regrets at all [about moving here],” she says. “This is my home, and I will die here. My heart is very happy with that.”

Services Australia recommends pensioners considering living abroad for longer than six weeks report their plans to Centrelink. Visit servicesaustralia.gov.au for more information on how payments may be affected.