You\u2019ve worked hard for many years and now it\u2019s time to kick your feet up and enjoy your retirement. The question is, should you stay in South Africa or head abroad, asks Tom Barlow, director at Sable International.<\/p>\n
Moving overseas is a great adventure, but while picturing yourself sipping cocktails on a beach or taking leisurely strolls through exotic marketplaces, it\u2019s easy to get too swept up in the excitement.<\/p>\n
Leaving your current life in favour of something different can be incredibly rewarding, but it\u2019s a big decision that shouldn\u2019t be taken lightly.<\/p>\n
Here are a few factors to consider before you commit to the big move.<\/p>\n
Residency and visas for retirement abroad<\/strong><\/p>\n Your choice of where to retire will likely be constrained by which visas and emigration options you qualify for.<\/p>\n Residency- and citizenship-by-investment<\/strong><\/p>\n The easiest way to retire overseas is through an investment visa. These visas, often known as \u201cgolden visas\u201d, are offered by governments to encourage foreign investment.<\/p>\n You can usually qualify by either purchasing property in the country or by making a large capital donation. In exchange, you\u2019ll be given permanent residency and sometimes a full second citizenship.<\/p>\n Digital nomad visas<\/strong><\/p>\n These are visas aimed at those who are earning foreign income. For example, someone who is earning a living through social media or a website. As pensions count as foreign income, these visas are often perfect for retirees too.<\/p>\n Passive income or retirement visas<\/strong><\/p>\n Some countries have visas specifically aimed at retirees or those who can earn income without working. For example, Portugal\u2019s D7 visa.<\/p>\n Visas through family<\/strong><\/p>\n If you had a parent or grandparent born in your country of choice, you might be able to apply for a visa that allows you to live and work in the country and eventually claim citizenship. For example, the UK Ancestry visa. Other countries, for example Australia, grant visas to parents of citizens.<\/p>\n It\u2019s important to consider the long-term when applying for a visa, as some visas only offer temporary residency, and you don\u2019t want to be forced to uproot again when the visa runs out.<\/p>\n It\u2019s also important to compare how much different visa routes might cost, the time you\u2019re required to stay in the country in order to qualify for permanent residency or citizenship and the timeframe \u2014 how long the visa application and processing will take.<\/p>\n Lifestyle considerations<\/strong><\/p>\n When considering where to spend your golden years, bear in mind that going somewhere on holiday and living there permanently can be very different.<\/p>\n The weather<\/strong><\/p>\n Ask yourself: Is the weather very different from where I currently live? Am I willing to adapt? For example, moving further north might mean you have to get used to whole months of snow.<\/p>\n Moving to an island in the Caribbean might mean white sand beaches some of the time, but also hurricanes and tropical storms in the off-season. Weather conditions can have a large effect on our overall happiness.<\/p>\n Religion and personal freedoms<\/strong><\/p>\n Look into whether you\u2019ll be able to freely practice your religion and if there are any other local laws or customs that you don\u2019t agree with or will make it difficult for you to fit in. South Africa has the benefit of being a diverse country with many freedoms enshrined in the constitution.<\/p>\n As a result, we\u2019re sometimes unprepared when this isn\u2019t the case in other countries that we\u2019d like to call home.<\/p>\n Some of these laws might be easier to live with than others. There\u2019s a great difference between not drinking alcohol when out in public, for example, and the country having laws against you being with the person you love.<\/p>\n Culture shock<\/strong><\/p>\n Part of the appeal of travelling to somewhere new is getting to experience new cultures and customs. But, once again, there\u2019s a difference between experiencing these briefly or living them.<\/p>\n Read up about the people and about what behaviours are expected before you decide for certain on a retirement destination. In some places, it will be considered rude if you do not know the local language, for example.<\/p>\n While in others, the most you\u2019ll have to worry about is rooting for the wrong rugby team (or using the word \u201crooting\u201d \u2014 which is considered very rude in Australia!).<\/p>\n Once you\u2019ve chosen a location, finding an expat community on Facebook or other social media before you arrive can prepare you and help you feel at home once you land.<\/p>\n Easy access to home comforts<\/strong><\/p>\n One of the things that South African expats miss most when overseas is our food. Food is a factor \u2013 what do the locals eat, what is manufactured locally, what food is affordable? But home comforts go beyond whether Mrs Balls chutney is easily available or not.<\/p>\n There are many types of products and experiences that we rely on for our day-to-day happiness. Research whether you\u2019ll still be able to do your favourite hobbies and whether it\u2019s possible to source your favourite brands locally.<\/p>\n It\u2019s also worth considering this when choosing a location within a country. An idyllic vineyard two hours from the nearest town might seem like a dream come true\u2026 until you need to do grocery shopping and there\u2019s no Takealot, let alone Amazon.<\/p>\n Transport links<\/strong><\/p>\n Related to the above, living on a quiet hill with a gorgeous view in the middle of nowhere is an appealing fantasy, but it might not be the wisest reality.<\/p>\n Living in a new country can be isolating enough and you\u2019ll want to have easy access to services, medical help if needed, and expat communities that can make you feel welcome and help you get settled.<\/p>\n When choosing a country, also consider how easy and affordable it might be for your loved ones to come visit you, especially if you have grandchildren who you would like to see often. South Africa\u2019s public healthcare may not be known for its high standards, but it is free. We also have the option to use private healthcare if we desire it. This choice is not possible in every country.<\/p>\n In your retirement years, when you are more likely to need health services and be on a limited budget, it\u2019s important to consider the quality of healthcare you\u2019ll be able to receive in your new home and its cost.<\/p>\n Many top retirement destinations do offer free healthcare that\u2019s of a high standard, but sometimes you must have permanent residency or citizenship before you can make use of it.<\/p>\n Tax and financial factors to retiring abroad<\/strong><\/p>\n Will you be able to continue working?<\/p>\n Some retiree visas do not allow for you to continue working and only allow a passive income \u2014 your pension and any other investment income.<\/p>\n If this is the case, you will need to work out whether your passive income, when converted to local currency, is enough for you to comfortably live on.<\/p>\n Generally, even if you can work in your country, it\u2019s better to ensure you have enough to live on regardless as it takes time to set up a new venture, especially if it\u2019s in a different jurisdiction.<\/p>\n That way, any extra you make can go towards luxuries and you won\u2019t have to deal with the stress of wondering whether you can make ends meet.<\/p>\n Tax residency and double taxation agreements<\/strong><\/p>\n When you start living abroad, your tax residency will likely change. This means that you will need to start paying tax in your new home.<\/p>\n South Africa has a number of agreements with other countries to prevent South Africans having to pay tax on the same income twice. Look into whether the country you wish to relocate to has this type of agreement with SA, as it could make a large difference to the size of the pension you take home.<\/p>\n It\u2019s worth taking the time to get advice from a tax practitioner with experience in these matters. Some countries offer tax incentives for foreigners. For example, Portugal has the non-habitual resident tax regime (NHR) that means you only need to pay 10% flat rate tax on your pension for your first 10 years living in Portugal. It\u2019s worth finding out if your country of choice has such incentives.<\/p>\n Intestacy laws<\/strong><\/p>\n Different countries have different laws about who automatically inherits (if there is no will) and also what tax must be paid. If you have a complex family situation, it\u2019s important to consider how your estate will be impacted if you relocate and to make necessary allowances.<\/p>\n How will relocation affect the trusts you have set up, if at all? Will you be able to leave the new assets you acquire in your new country to your nearest and dearest?<\/p>\n Currency fluctuations<\/strong><\/p>\n South Africans are no strangers to the ups and downs in currency value. However, there\u2019s an extra layer of complexity when you\u2019re being paid a pension in one currency while receiving it in another.<\/p>\n Ensure there\u2019s enough of a margin that you will still be able to live within your means should the Rand become weaker. You might consider transferring your pension or retirement sum into an offshore living annuity or another vehicle that offers more stability.<\/p>\n Your investments<\/strong><\/p>\n It\u2019s essential to look at your assets and investments before you leave South Africa as it will likely be necessary to restructure while you\u2019re still resident in SA. Many of the policies and vehicles you currently have will not be suitable when you leave the country.<\/p>\n
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\nHealthcare<\/p>\n
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\nTax incentives<\/p>\n
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