Paradise lost – bursting the bubble
It all looks very alluring from a distance – retirement in a luxury condominium in a sun-drenched country where taxes and living costs are low, servants and golf fees are cheap and the pension goes much further than it does in Australia.
Where a family can dine out for under $10 and life looks sweeter surrounded by a simpler, less-materialistic culture.
“After years of hard work,” says one enthusiastic website promoting luxury condominiums, “it makes sense to seek out new experiences and moving to a new country can offer you a valuable opportunity to pursue new interests and an exciting lifestyle”.
There are many such websites promoting the benefits of retirement in places such as Bali, Thailand and Malaysia.
“Several countries in South-East Asia and the Pacific now compete
for the retiree dollar although Thailand and Bali remain the top destinations”
Most are maintained by those with a vested interest in attracting the expatriate dollar, but there are also blogs written by expatriates full of enthusiasm for their new home and willing to share useful information.
From these and other sources, it appears that more Australians are choosing to retire offshore – a Centrelink spokesperson says about 700,000 Australian pensioners are living abroad, plus an unknown but undoubtedly larger number of self-funded retirees.
It’s equally apparent that of those who leave, many return; usually within five to 10 years.
The reasons vary from concerns about crime and political instability, to a general frustration with dealing with an alien culture. But the main issues are health, finance and taxation, for there are many pitfalls facing retirees seeking an offshore paradise.
And that’s not taking into account all the personal and emotional issues – missing grandchildren, neighbours and friends and retaining contact with aging relatives.
Tim Garnett, 67, lived in Bangkok for several years as an expatriate with a large international company.
He retains a great affection for Thailand and visits regularly – but he wouldn’t retire there.
He cites the problems of property ownership, visa renewal and Thai bureaucracy as the main reasons.
Foreigners buying condominiums should check their ownership status very carefully, he says, because some expatriates – and even some Thais – have lost money through being tied up in contracts they didn’t understand.
“Thailand is still a pleasant place, but when you’re older you need security and certainty and I don’t think you get that to the degree that we do in Australia,” he says.
Other Thailand veterans Bruce Wallace and Dee Kidd agree. Bruce, who worked in Bangkok for 17 years also decided against retiring there, and says there is a subtle prejudice against foreigners so “you never quite fit in”.
More strongly, he speaks of an “undercurrent of evil” in Thai society with deep-rooted socio-political problems that most expatriates just don’t see.
His advice to anyone planning to retire there is: “Don’t. And if you do, don’t believe anything anyone tells you!”
Dee, now living back in Brisbane, found life in a typical Chiang Mai expatriate condominium community incompatible but her attempts at voluntary work enjoyable, though frustrating due to the very different approach by Thais to issues such as insurance and workplace health and safety.
“You want to make a difference, but it’s not easy,” she says.
Several Thai provincial cities, notably Chiang Mai, have positioned themselves as retirement destinations for Australians and other expatriates, and some retirement complexes are developed for specific national groups.
For instance, there is a condominium community of retired Swedes wryly referred to by one Aussie expat as “all Ikea and raw meatballs”.
Thailand offers retiring expatriates a special visa, allowing multiple entry-exit travel that’s renewable annually in-country.
To comply, you must have at least $32,350 in a Thai bank or $2630 monthly income or a combination of both (this amount is doubled for a couple).
This deposit can be used during the year, but must be replenished three months in advance of visa renewal.
Also required is a local police report to show you have no criminal record and a doctor’s certificate stating that you are in reasonable health. The latter may be of particular concern if you have a chronic health condition.
All this takes considerable negotiation and most expatriates employ specialist Thai legal firms to handle it for them, an added cost to take into consideration.
Indonesia offers similar visa and retirement conditions, though negotiating with officialdom there is generally considered tougher than Thailand, and there are fewer reliable specialist legal firms available.
Applicants must be 55 years or older and are required to submit a range of documents including a statement from an Australian pension fund foundation or bank of funds available, to a minimum of $19,400 a month; plus a statement of living accommodation to a minimum cost of $45,000 for a purchased house or apartment, or rental cost of $647 a month.
All this must be accompanied by a statement declaring employment of an Indonesian maidservant.
Extra costs include immigration fee and a sponsor letter from an appointed travel agency.
The “retirement” visa costs between $490 and $685 and is extendable up to five years, after which you may apply for permanent residency.
According to Indonesian Government sources, even on a retirement visa you will be required to pay Indonesian personal income tax of 35 per cent for annual incomes over a certain amount.
Foreigners are not allowed to own land in either Thailand or Indonesia.
In Thailand, all those glamorous and temptingly-priced condominiums are purchased on long leases; the land remains in Thai ownership. It’s the same in Bali.
Dentist Don Harvey “owns” a house in Bali which he had built, and which he uses on his periodic visits there and also rents out to holidaymakers.
In fact his tenure is leasehold, with the resale value of the house determined by the length of time left on the lease.
“After that you renegotiate the lease or just let it go back to the landowners,” he says, adding that with the comparatively cheap price of building and his return on holiday rentals, he’s quite satisfied with the deal.
Despite optimistic reports by Indonesian-based realtors to the contrary, the Indonesian government is currently cracking down on ownership of land by foreigners.
While the leasehold period may be extended to 60 years, buyers should be very wary indeed of so-called Convertible Lease agreements, deals involving Indonesian nominees or any other property “purchase”.
The website expat.or.id/info/buyingproperty has essential information for anyone intending to retire to Bali.
Diana Hesse went to live in Bali six years ago to write a book after she was made redundant at the age of 60.
She was seeking a simpler and more spiritually attuned lifestyle in a beautiful place where her money would go further than in Australia and thought she had found it in a village near the popular expat retirement destination of Ubud.
She rented what she describes as her “dream” Balinese-style home and proceeded to write her book, Seeking Simplicity, which gives a good idea of what it’s like to live among the local people, rather than in an expat community.
She soon found her idyll marred by annoyances such as frequent burning of plastic rubbish and lots of crowing roosters.
She moved into Ubud but became increasingly concerned about the relentless destruction of rice paddies for building development, increasing traffic, corruption, distance from a “decent” hospital, harmful agricultural practices, poor litter control and disposal and the increasing materialism overlaying what she believes is still a strong traditional culture.
She also began to miss things about Australia, such as libraries and beaches and today lives back on the Sunshine Coast, although she’s investigating the feasibility of living in Chiang Mai, Thailand for part of each year.
Several countries in South-East Asia and the Pacific now compete for the retiree dollar and although Thailand and Bali remain the top destinations, Malaysia is offering inducements such as renewable 10-year multiple entry visas and exemption from income tax on pensions under its “Malaysia – My Second Home” program.
Yet older Australians are wary of committing themselves to countries with different political systems, human rights practices and – above all – rigidly moral and inflexible religious beliefs.
Other common constraints include corruption, difficulties dealing with tradespeople and officials, language problems, low sanitation standards, traffic congestion and poor roads, poor communications, lack of environmental controls and different legal codes.
As Tim Garnett says: “In Thailand the law tends to favour Thai men in high positions!”
Above all, those contemplating a life abroad must consider the issues of finance and taxation for both pensioners and self-funded retirees.
These can be complex and legally confusing in terms of pension and Medicare eligibility (for returnees), taxation of Australian income and assets, management requirements for super funds, and taxation agreements between Australia and other countries.
Nobody should even consider retiring overseas without prior discussions with Centrelink, reputable Australian financial advisors and the ATO – and checking out this website: afrsmartinvestor.com.au/p/new-investor/how_to_retire_abroad_5WtanqcdvRRyuYPSJPNHYI.
Retired builder Brendan Torrens, 73, first tried retiring to the Philippines but found the political situation too uncertain and the strain of everyday life just too taxing.
“Try getting anything done there!” he says now. “You need to speak the language, understand the system, know who has influence – just to get your plumbing fixed! We went there for a simpler life and what we found was aggro! And the poverty everywhere gets to you after a while.”
He then tried Thailand, which he found easier and more compatible but still not what he’d hoped.
“You always hear how wonderful the medical system is there and in many ways it is, but what people overlook is that in Australia we not only have free medical for those who can’t afford insurance, we also have a whole range of subsidised rehabilitation and aged care options which you just don’t get in Asia-Pacific countries.
“There’s a big difference between retiring early in your 60s to some exotic place when you’re still fit and finding yourself in your 70s and 80s, ill and helpless among foreigners.
“In South-East Queensland we have it all really – sunshine, great beaches, clean cities, some degree of environmental protection, generally good, accessible and inexpensive health care.”
And at the end of the day, it’s home!