10 Top Tips for Retiring Overseas

 By Stephen Wyatt and Colleen Ryan*

The kids have grown up. The dog is dead. The job has ended or it’s just too intolerable to put up with any more. The family home is way too big. And you are still only a pup at 60.

What the hell are you going to do?

Well, many Australians are moving to Penang, to Ubud, to Chiang Mai or other parts of Southeast Asia for a vastly cheaper but better quality of life. A new book called Sell Up, Pack Up and Take Off and an associated web site www.planet-boomer.com looks at retiring on a shoestring in Southeast Asia.

The cost of living in Southeast Asia is anywhere from 50-80 per cent lower. Better still, you can take your Australian pension or continue to receive superannuation when living overseas.

But before simply packing up and taking off, you need to do your homework and cover some basic issues. Here they are -

1)    Choosing your new country.

You may have an idea of paradise firmly fixed in your mind and it may be somewhere that you have visited often in the past. Or you may have no idea – just a firm belief that you need to retire somewhere cheaper if you are to maintain a good and enjoyable lifestyle. Either way – it is worth setting out your criteria and carefully checking which country best suits your needs. Bob set up a spreadsheet with considerations like crime, taxes, cost of living, visas and ease of communications. His spreadsheet spat out Penang, an island off the coast of Malaysia. Read Bob and Marion’s story here: http://www.planet-boomer.com/real-stories/#/bob-and-marion-in-penang/

2)    Superannuation.

Get your finances in order before you leave. Make sure that your superannuation pension stays tax-free while you are overseas. If you have a self-managed super find, it will need to be restructured to ensure it remains a complying fund for Australian tax. If your super is with an industry fund or a big retail fund, the pensions you pay from it will be free from Australian tax.

3)    Age Pensions.

 You can receive the age pension in Thailand, Malaysia, Vietnam or Bali just as you can in Australia. Some 80,000 Australians are already receiving their age pensions overseas. But there are some tricks to be aware of. For example, you need to be eligible for, and already receiving, the age pension before you relocate. Read about it here. http://www.planet-boomer.com/aus/personal-finance/#/aus/pensions/

A useful government website is: http://www.humanservices.gov.au/customer/subjects/australians-overseas

4)    Visas.

Organise your long-stay visas from Australia before you relocate. There are retirement visas available in Thailand, Malaysia and Indonesia. But you will need long stay visas for Europe unless you have an EU passport. Malaysia has the most attractive visa for Australian retirees. Malaysia My Second Home provides a 10-year visa for successful applicants and guarantees that all income earned outside Malaysia is free of Malaysian tax. See details here www.mm2h.gov.my/index.php/en/

5)    Health Insurance.

Take out an international health insurance policy. It is worth the expense. International health insurance can be expensive, but there are a number of different levels of cover from catastrophe insurance to the gold standard policy and prices vary widely

There is a very competitive global market for health insurance products. Use sites like http://www.medibroker.com/ or http://www.internationalcitizens.com/health_insurance/compare-plans.php to compare products.

Tell the truth to your insurer about any pre-existing illnesses. Failure to do this can lead to a denial of claims. Check if your proposed insurance company is recognised by major health care providers in your new country of residence.

6) Medicare

Medicare is principally a health system for Australians who live in Australia. Non-residents are theoretically not entitled to Medicare on visits home to Australia but there is some flexibility for temporary absences, usually of up to two years. Once you have lived outside Australia for more than five years there is no flexibility – you are not entitled to Medicare on visits home.

7) Rent or Buy?

Rent before you buy in your new country. It may be best not to buy at all – property rules for foreigners can be complex and, in Southeast Asia at least, rents are cheap. See www.planet-boomer.com for a discussion of the property purchase rules for major Southeast Asian countries. But take Thailand as an example. Foreigners can legally, and easily, purchase an apartment anywhere in Thailand, but they cannot own land and houses.

However, foreigners manage this restriction in many ways, including:

Buying the land in the name of a Thai person, usually a friend or someone they think they can trust, then leasing it back for 30 years with an option to extend. Some developers already offer house sales using their own 30-year lease option.

Or, starting a Thai company in which the foreigner can own up to 49 per cent of the shares and then buy and own land through the company.

8) The Family Home.

Many people choose to rent out their home in Australia and rent property in their new country. This way they have the option of returning and they still have their foot in the Australian property market. But how does that affect the tax free capital gains that you have built up in your principal place of residence? The good news is that you can rent out your principal place of residence for up to six years without affecting the tax free capital gains when you eventually sell it. See more at http://www.planet-boomer.com/aus/personal-finance/#/aus/taxation/

9) Tax Status – Resident or Non Resident

Get your tax planning in order before you leave the country. A key factor to consider is whether you are to become a resident or non-resident for Australian tax purposes.

Residents for Australian tax purposes are taxed on their world-wide income but they are more likely to qualify for Medicare on visits home and they benefit from most superannuation concessions as well as the tax-free threshold of over $18,000 a year

Non-residents for tax purposes only pay tax on their Australian income and have valuable tax advantages on their share investments and funds on deposit in Australia. But they lose the tax-free threshold, and will not qualify for Medicare benefits.

Make sure all your documentation is in order to prove your status as either a resident or non-resident. This is a useful link https://www.ato.gov.au/Individuals/International-tax-for-individuals/Going-overseas/When-you-leave-Australia/?anchor=P737_46999#P737_46999

10) Technology

Get on top of technology. Get set on Skype, Viber and Facebook to stay in touch with friends and family.

* Stephen Wyatt and Colleen Ryan are the authors of ‘Sell Up Pack Up and Take Off’ published by Allen and Unwin, September 2014. They are also co-founders of Planet-Boomer.com