Retiring Abroad: what to consider before you retire overseas

Australia is the lucky land, but as Australians, we’re also lucky to have the freedom to travel and explore the world

I’ve lived and worked my whole life to reach the point where I can take a little longer to sip my morning coffee, drive a little further to the farmer’s markets instead of the local grocery store, spend my time doing the things that bring me joy, and generally making the most of every minute of every day.

Many people facing retirement long for something similar. They dream of boating or golfing or gardening. But there’s a growing number of Australians who add doing all this in another country to their bucket list. In fact, the Australian Bureau of Statistics put this number at a 47% increase over 10 years in 2018, and this has likely to have continued to soar in recent years.

The hit list of overseas countries to retire in include New Zealand, Thailand, Malaysia, Greece, and my personal favourite, Portugal.

Why I moved to Portugal

When I moved here 6 months ago, I wasn’t sure what to expect. But I can honestly say it's been one of the best decisions of my life.  This beautiful country has much to offer retirees - beautiful scenery, a relaxed Mediterranean lifestyle, and a low cost of living.

I live in an old fishing village in the Algarve. I can see the vastness of the ocean from my bedroom

window and there is a breathtaking hiking trail along the coast right next to my house. Talk about picture perfect retirement!

The locals are friendly, sincere, and helpful in ways I haven't experienced anywhere before, and I never feel homesick as every second person here is an expat – we have people living in my neighbourhood from Australia, England, Germany, Sweden, Netherlands and Switzerland. For the first time in my life, I feel like I’ve found my extended family of choice!

I’m living my dream out every day here. I love going to the farmers market twice a week to get organic, local, and seasonal fruits, vegetables, and herbs. Some days I don’t even make it to the market because I just pick fresh figs, olives and peaches straight from the many fruit trees growing along the streets.

Cost of Living

The cost of living here is far more achievable for a retiree than in Australia - in fact, it’s around 37% cheaper! That’s not surprising though is it really when Australia is considered the 10th most expensive country in the world. Portugal is number 69 on that list. Transport is cheaper. Food is cheaper. Beer at the pub is about $1.78. Coffee is $1.42. Going to the movies is about $7. Even the rent is cheaper! If you want to buy land here, it’s not a pipe dream like it could be for you back home. If you ever needed a compelling reason to book a one way ticket to Portugal, the low cost of living would have to be it.

What you need to know before you go

I am a huge advocate of packing it all up and packing it in as you can probably tell! But there was a lot of preparation involved in getting to this point, so that I’m not worried about what’s happening back home.

Before you reach for the passport, here are some of the financial considerations I had to get in order. If you don’t do these, your long awaited overseas living could end up being a short vacation before needing to return for legal or financial obligations.

Financial tips for living overseas

TruWealth is a great place to start when it comes to preparing for living overseas. Check out the article called  “Australians living overseas” for tax, super and insurance details to consider.

Most people can continue to receive the Age Pension when living overseas, it’s just at a different rate to Australia. I suggest you do some research around the Outside Australia rate.

Medicare and health insurance overseas

Some countries have a reciprocal agreement with Australia whereby they honour our Medicare system. You will still need travel health insurance but this may help reduce costly medical expenses. Unfortunately Portugal doesn’t have this arrangement but Belgium, Italy, New Zealand, Norway, Slovenia and the UK are some that do.

Superannuation

Superannuation is generally able to be taken out even when overseas, except in the case of managing self managed superannuation funds outside of Australia. There are restrictions in this circumstance that you would have to consider before retiring in Portugal or anywhere else for that matter.

Exchange Rate

You could be living the dream if the Aussie dollar rises, but if the value of the Australian dollar drops, this will affect your budgeting and eat through your savings much quicker than anticipated. Keep an eye on the exchange rate and make sure you are always a few steps (and months or years) ahead.

Contingency plan

There’s throwing caution to the wind, and there’s being underprepared. The latter is the one you DON’T want to be when moving overseas! You can have Plan B, C and D up your sleeve and still live freely and independently. If you need to come home for any reason (homesickness is a real thing!), can you afford the flight and accommodation and travel expenses to come back? Could severe weather events affect your lifestyle? Have you worked out your tax obligations so you don’t end up with a hefty bill at the end of the year?

If you’re dreaming of retiring abroad, speak to a financial advisor so you can do it well, and do it right.

Viktoria Petrov-Hetzer