How to retire overseas - on the Age Pension
Unfortunately, it looks like none of us will be traveling overseas anytime soon. COVID-19 concerns mean international travel is unlikely to resume until the later part of 2021. But that gives you plenty of time to think about your travel options and consider a more permanent move.
Whether you’re looking for a tropical paradise, want to make the most of your savings, or just want a more comfortable lifestyle, retiring overseas is an increasingly popular option for Australians.
Estimates placed 90,000 Australians retirees on foreign soil in 2016, and the number is rising every year. New Zealand is the preferred destination, with Italy, Greece and Spain close behind.
But how easy is it to retire overseas? And what does it mean for your Age Pension benefits?
Can I receive the Age Pension overseas?
The good news is you should be able to access your Age Pension while living overseas. This will be paid at the Outside Australia rate which means some entitlements may be impacted. For a couple this payment may be up to $34,767 per annum and is subject to the usual rules around income, assets and eligibility.
You can learn more about the rules and payment rates on the Centrelink website.
Do I need to tell Centrelink?
Unless the country you’re moving to has a social security agreement with Australia, you’ll need to put in your claim for the Age Pension locally with Centrelink. If you’re already overseas, that means you’ll need to return home first.
You’ll also need to investigate residency requirements in your overseas home. These obviously vary from country to country, and some places are easier than others. The Centrelink website has more information on which countries have an agreement with Australia (and how this may impact your Age Pension payments).
Will I be able to access local healthcare?
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 publicly funded medical services in countries that have a reciprocal health care agreement. These agreements usually only cover essential medical treatments and vary from country to country.
In most instances you will need 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 put in a reimbursement claim), or make a co-contribution payment.
Can I sublet my home in Australia?
Retiring overseas can mean a major lifestyle change and shouldn’t be taken lightly, but there are other options that allow you to get a feel for overseas 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.
According to a report by HSBC, 31% of Australian retirees living overseas own a property in their host country. While that may allow you to fast-track residency in certain countries, whether you choose to rent or purchase a property overseas will obviously depend on your circumstances.
Which overseas destination shall I pick?
So that takes care of the paperwork and the finances, only thing left is to decide where you’d like to retire.
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.
Whichever destination you choose, retiring overseas is not a decision to be made lightly. Which means you'll probably need a solid 12 months to organise the logistics and sort out your plans. With COVID-19 still hanging over our collective heads, now is the time to start exploring your options and planning ahead.
Your questions answered
Speak to a financial planner about retiring overseas and what that means for your super and Age Pension.
Any figures quoted are correct at the time of writing but may be subject to change.
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