Property prices, cost of living, medical costs and taxes are some of the things to consider
- By Gaurav Ghose, Financial Features Editor
Retiring overseas is a life-long dream for many, but careful planning is necessary to prevent your golden years turning to dust.
Residential property, living expenses, medical costs, tax and visa regimes, recreation and entertainment, as well as safety and climate, must all be considered and provided for. There is no one-size-fits-all, ballpark figure, when it comes to costs.
Gulf News asked UAE-based independent financial advisers about some popular retirement destinations among local expatriates and the costs of retiring there. Thailand, Malaysia, France, Italy, Spain and Australia were among the most common, but Bulgaria, Canada, Costa Rica and New Zealand as well as Panama, the Philippines and Portugal were also cited.
Moving abroad is obviously a big step, says Rupert Connor, senior partner at Acuma Wealth Management. "Taking advice from a professional adviser [is necessary] before embarking on such a move," he said.
In general, the cost of living in most European countries is higher than in Asia. And, European economies are being significantly affected by the debt crisis, says Sarah Lord, wealth planning director at Killik and Co, and the long-term impact is unclear.
Currency is an important consideration to be taken into account when determining where to settle into retirement. "One should consider where your pension needs to come from and in which currency it should be," says Steve Gregory, managing partner of Holborn Assets. "Sterling income could cause you problems if you move to Euroland and you probably want dollars in the Far East. Moving your pension rights from your home country can enable you to set the currency for your retirement zone, so that you don't have to lose out if the pension income falls in value through currency devaluation."
As Lord points out, for a British expatriate retiring to a European country, in August 2007, the exchange rate was ¤1.475 to a pound, today it is around ¤0.857, a fall of around 25 per cent of the spending power of a UK pension in a European country.
It is important to visit a country regularly before deciding to retire there, or even stay there for six months before making the final decision, says Gregory.
Even then, no decision is ever final in today's world, he says.
"Many retirees to Spain, for example, have moved on to Bulgaria where properties are cheaper and money goes further."
Koh Poda Beach Krabi, Southern Thailand
Cost of living:
- Rent per month: 1-bedroom apartment within a city centre: $341; outside a city centre: $192;
- 3-bedroom apartment within a city centre: $1,036; outside a city centre: $537
- Buying property: per square metre within a city centre: $1,770; outside a city centre: $998
- Utilities (electricity, water, gas and garbage): $61Internet (6mbps): $22
- Transportation: Monthly pass: $25
- Monthly expenses for 2,000 calorie balanced diet: $225
- Meal for two in a mid-range restaurant, three course: $16
- Sports/Leisure: Monthly fee for fitness club adult membership: $31Tennis for one hour on a weekend: $5
Access to health care: The government funded universal health care is considered decent enough but there has been a rapid growth of private group hospitals, including the internationally known Bumrungrad, which cater to the well off. That means that the private insurance industry has also grown. When shopping for insurance policies, pay attention to the exclusion list and pre-existing health problems that are not covered, says Connor. "There is a standard average price of premiums in Thailand that vary between age groups. In general, you can choose between different insurance packages depending on what kind of coverage you need. It is important to bear in mind that outpatient coverage is less expensive as in-patient treatment involves a stay in the hospital for surgery or observation."
The draw: Thailand offers great climate, low prices, no taxes from overseas income and some good medical facilities, says Gregory. Also, Connor points out, the majority of Thailand's cities are now well developed and they offer good communication and transportation infrastructure. Internet is readily available as too are international television programming and good mobile and landline phone networks. "In more remote areas of Thailand the infrastructure is much less developed and these areas will only be suitable for retirees who are looking to escape the developed world and live life like a true local," Connor adds.
Night view of Kuala Lumpur
Cost of living:
- Rent per month: 1-bedroom apartment within a city centre: $302; outside a city centre: $169;3-bedroom apartment within a city centre: $683; outside a city centre: $356
- Buying property: per square metre within a city centre: $1,151; outside a city centre: $798
- Utilities (electricity, water, gas and garbage): $46Internet (6Mbps): $40
- Transportation: Monthly pass: $26
- Monthly expenses for 2,000 calorie balanced diet: $172
- Meal for two in a mid-range restaurant, three course: $15
- Sports/Leisure: Monthly fee for fitness club adult membership: $43Tennis for one hour on a weekend: $5
The draw: Compared to other major Asian cities such as Tokyo, Singapore, and Hong Kong, Kuala Lumpur is cheap, says Connor. Also, it's a modern cosmopolitan city with clean streets and sidewalks and every modern convenience. Not only are three world-class playgrounds — Thailand, Bali and the Philippines — all within a few hour's travel from Malaysia, but with miles of white sand coastline, tropical islands, and beachfront property galore, "it has all the makings of a fairy-tale setting," says Connor. He considers the country as Asia's best kept secret for expats, with a vibrant mix of foreign and indigenous tribal cultures, creating a veritable melting pot of peoples, traditions and religions. Also, just about everybody speaks English. The appeal of Malaysia lies also in its low crime rates, points out Sarah Lord. Malaysia is actively trying to attract people to retire in the country and will admit people on a permanent basis under the "My second home" scheme, provided that you can demonstrate assets of at least $100,000 and a monthly income of $3,000, Lord points out.
Cost of living
- Rent per month: 1-bedroom apartment within a city centre: $805; outside a city centre: $650;3-bedroom apartment within a city centre: $1,675; outside a city centre: $1,252
- Buying property: per square metre within a city centre: $6,554; outside a city centre: $4,661
- Utilities (electricity, water, gas and garbage): $128Internet (6Mbps): $40
- Transportation: Monthly pass: $63
- Monthly expenses for 2,000 calorie balanced diet: $285
- Meal for two in a mid-range restaurant, three course: $62
- Sports/Leisure: Monthly fee for fitness club adult membership: $77 Tennis for one hour on a weekend: $23
"Expatriates who have relocated to France also talk about the high fees (as much as 10 to 15 per cent or even more) associated with buying [property] there, so this will need to be factored into your financial plan," says Connor.
But, he points out, that some of the bigger expenses, such as rent, health care and education, are subsidised by the government, actually making them more affordable; so in the end, things even out somewhat. "A single adult can expect to spend about $600 a month on meals, groceries, transportation and entertainment in France."It is important to note that if you retire to France, you will be required to pay taxes there and so, says Connor, "you should speak to a financial expert to find out more about this and to consider strategies that will be most beneficial for your situation."
Access to Health care: The French health care system has been cited as one of the best in the world and is surprisingly provided at a reasonable cost, according to Connor. Medications are also much less expensive. It is important to note, though, that while the care costs less, the retiree will need to purchase private health insurance to cover most of the expense, he says. "The good news is that the cost for such insurance is extremely affordable in France," Connor notes. "Private health insurance averages about $1,500 per person a year. Of course, premiums may vary, depending on your age and general health. If money is a concern, you can look into reducing costs by buying insurance as a member of a larger group or association, which can reduce the premiums by as much as 50 per cent."
The draw: You can expect to find a high quality of life when retiring in France, says Connor. "The food, beverage, fashion and art will make your life an interesting and impressive cultural mix that you will be unlikely to match anywhere else in the world. As long as you are willing to learn the language it won't take too long to settle in," he notes. The features that each region in France offers differ widely. "If you want a remote countryside location, or a village rich with history and architecture, you can find it. Further, you can also find mountains, waterways, nightlife and gourmet food and beverage if you know where to look," Connor says. The fact that it is part of Europe for car or rail travel appeals to expats, Gregory says.
Cost of living:
- Rent per month: 1-bedroom apartment within a city centre: $856; outside a city centre: $631;3-bedroom apartment within a city centre: $1,539; outside a city centre: $1,104
- Buying property: per square metre within a city centre: $5,677; outside a city centre: $3,339
- Utilities (electricity, water, gas and garbage): $187Internet (6Mbps): $32
- Transportation: Monthly pass: $41
- Monthly expenses for 2,000 calorie balanced diet: $271
- Meal for two in a mid-range restaurant, three course: $66
- Sports/Leisure: Monthly fee for fitness club adult membership: $70; Tennis for one hour on a weekend: $19
"Compare this to the cost of living in a more rural area, where a charming rental apartment can be found starting at about $400 monthly. There is also a monthly service charge on rentals, which varies depending on where you live. It can be anywhere from $30 to $300 a month."In addition to housing costs, you can expect to need about $1,500 to $2,000 or more each month to cover your food, utility bills and other expenses to live a reasonably comfortable lifestyle, says Connor.
Access to health care: There is a strong health care system. "If you are lucky enough to be a native Italian or have European citizenship, you may qualify for free health care under the national system. Keep in mind that other nationalities usually have to pay for their own health care," says Connor. Private policies vary considerably in price but they generally cost from $1,800 to $2,700 per year for a family of four. They are higher for the elderly. Many companies, retirement groups and other organisations offer lower group rates.
The draw: Italy may be the perfect spot if you want to spend your senior years living in peace and beauty, says Connor. "The landscape is rich with diversity, whether you want to live in the rustic countryside, prefer the bustling pace of a city or opt to live by the beach. Each region has its own characteristics as well. But no matter where you choose to live, hopefully you will be close enough to take advantage of the wealth of cultural activities that exist in Italy. The opera, art galleries, fine restaurants, old-world architecture, universities, vineyards and a variety of outdoor sports are enjoyed by Italians of all ages on a regular basis." Gregory points to Italy's great climate and many people speaking English as a second language as features that attract overseas retirees.
San Gimignano, Tuscany, ItalyCost of living:
- Rent per month:1-bedroom apartment within a city centre: $716; outside a city centre: $505;3-bedroom apartment within a city centre: $1,216; outside a city centre: $877
- Buying property: per square metre within a city centre: $4,912; outside a city centre: $2,929
- Utilities (electricity, water, gas and garbage): $109Internet (6 Mbps): $45
- Transportation: Monthly pass: $49
- Monthly expenses for 2000 calorie balanced diet: $204
- Meal for two in a mid-range restaurant, three course: $53
- Sports/Leisure: Monthly fee for fitness club adult membership: $58; Tennis for one hour on a weekend: $16
Access to health care: Spain has a well-developed national health system that is available to all. However, Connor says, the health service in Spain does experience high demand and there are often long waiting lists for treatment and operations. Many people opt for private health care in order to avoid this. Obviously, prices vary greatly according to the age and sex of the applicant; however, it is not prohibitively expensive, he notes. "To give you an idea, the average monthly medical premium for a 30-year old male starts around €55 per month; for females it's a bit a higher at roughly €70 per month and the levels increase the older you are. Better to keep home country private insurance."
The draw: For many retirees the dream of relaxing on a warm, sunny beach in a village or town that offers a laid-back and safe way of life comes true when they move to Spain, says Connor. "One of Spain's biggest appeals is the quality of life on offer. Retirement in Spain offers expats year-round sunshine, stunning countryside and beaches, and a relatively low cost of living. Retirees are attracted here by the fulfilling lifestyle as well as the financial benefits that arise from inexpensive housing and health care." Sarah Lord adds that excellent golf courses make Spain appealing too.
Cost of living:
- Rent per month: 1-bedroom apartment within a city centre: $1,487; outside a city centre: $1,127;3-bedroom apartment within a city centre: $2,473; outside a city centre: $1,661
- Buying property: per square metre within a city centre: $6,415; outside a city centre: $4,547
- Utilities (electricity, water, gas and garbage): $187Internet (6Mbps): $50
- Transportation: Monthly pass: $95
- Monthly expenses for 2,000 calorie balanced diet: $317
- Meal for two in a mid range restaurant, three course: $69
- Sports/Leisure: Monthly fee for fitness club for an adult membership: $74;
- Tennis for one hour on a weekend: $19
Health care costs: Life expectancy in Australia is high and the health and social care facilities on offer are of a very good quality, says Connor. The Medicare system provides free or subsidised medical treatment for all permanent residents. Anyone living or working in Australia (even temporarily), who isn't eligible for Medicare treatment and who doesn't like living dangerously should have private health insurance, he adds. Premiums vary considerably according to the state or territory, according to Connor. The average annual cost of 100 per cent hospital cover for a family is around $1,600 and the average cost of 100 per cent ancillary cover around $1,150. The average annual costs for a single person are $750 or $875 for hospital cover and $575 for ancillary cover. Premiums vary little between couples, families and single-parent families, who all pay around double the single premium. Premiums can be paid monthly, quarterly or annually, and a discount may be given for prompt or annual payment. (All figures are in US dollars.)
The draw: Retirement in Australia offers expats a high quality of life and an opportunity to enjoy retirement in a spacious, pollution-free environment that has an abundance of natural resources and beauty hot spots, Connors says. In addition to its well-developed infrastructure, Australia's moderate winters have made it a popular destination for retirees from abroad who seek a, pleasant climate. But Gregory says visa difficulties are preventing more people from going there.