Retiring in South Africa

[SAman4Aus]

We live in Aus and hold dual citizenship (Aus and RSA). Now that we are in our 50's the retirement thing becomes more of a consideration. We visit South Africa yearly for family reasons and to be honest things are waaaay cheaper there than in good al Australia. Food and drinks are an average 3 to 4 times cheaper than here in Aus even for the same brand product. I know prices keep going up in RSA, but realistically they cant get too expensive as the majority of the population are on the bread line.

So we're thinking, if one retires in RSA debt free, one's AU$ savings would last 3 times longer than if you retire in Australia, Thinking of buying a cottage on the beach in the Cape and live with our heads in the sand to avoid any of the local politics etc. (Yes I know it will have to be in a secure estate, crime will still be there etc etc)

The one drawback I can think of is medical services. In Australia you don't really need private medical but in RSA it's not an option to be without it. Even then I don't think the private hospitals in RSA are as good as the Ausy public hospitals (but then I don't really know for sure). Also not sure if one can even get medical cover once you're in your 60's and I'm sure it wont be cheap.

I know it's early days yet, but what other considerations am I missing with my retirement planning in South Africa? Has anyone else given the idea a thought?

BTW we don't have kids in Australia which makes it easier to up and go.

[SurferMan]

Hi Riekie,

You nailed it on the head. Respect for life. I would rather live a humble life in Aus as well, than da vida loco in SA, knowing every second could be my last. I played ball with my kids yesterday, so much fun. Took a walk to the beach (300m away) and had a blast till just before dark. Walked home and had a lovely al-fresco dinner with all the doors and windows flung open to catch the evening ocean breeze and sea view.

SA, thank you, it was nice, but no thanks. AUS, warts and all, is nicer for me and what I hold dear and like.

[Jamie]

Just a thought. We returned to SA after 8 years in the UK. Our medical aid contributions were loaded because we had been away more than 3 or 5 years. We ended up taking just hospital plan because all the others were way too expensive. I've seen many people living here in SA who were moderately wealthy during their 50s and 60s, reduced to living very frugally in older age because they had to make provision for medical bills. They are astronomical if you need anything big.

There are the retirees who live in these estates/villages with (expensive!!) frail care options eventually. They do have a lovely life, albeit a little confined?

It's a personal choice really. I'd rather be freeeee..... and feel safe mostly.

[chzaau]

I think the cost of living in South Africa is just starting to increase. I think people are going to get a hammering in the next couple of years. I would not be surprised to see VAT increase, personal income tax etc.... Interest rates will increase and so the cycle will continue.

The reason I say this is that in the last 5 years South Africa is almost 1 trillion rand in debt, 5 years ago we have very little debt. The FDI is not flowing in like it used to and the government is going to have to finance the shortfall some how, the only way will be to increase taxes.

It is going to be a real ride, if you are planning to retire make sure you plan to only retire on half of your retirement income, at least you then have a buffer for the increases.

[GMP]

This is just my opinion (and my first posting),

However I am in the middle of our PR application, handing in our EOI today! So I have been looking at this the other way round, coming from RSA to Australia and comparing prices of the general day to day items. There are somethings that just are cheaper in RSA than Australia especially when it comes to food and clothing. I earn a pretty good salary in RSA and have 2 paid off cars, owe very little on my bond (just sold the house though) and when the wife and I go shopping we dont have a list or check the prices we just buy whatever we want.

It came to a shock the other day when we decided to look at what we spending on food (Myself, wife and 1 year old son) so that we can compare to Australia. In November and December we averaged about R10,000pm on food alone. I was wondering if this is what we have been spending for the last year every month...and not surprised at all, the answer was no! In the beginning of 2013 we were spending on average R7,500+- a month(still seems much though but i also competed in a body building show last year) and from the second half it just started to escalate to where we are now. There are lots of factors to consider, the fuel price has jumped in the last year, the e-Tolls are running and government is proposing a new Tax for online businesses (anything sold online will be VAT included) and all of this is being passed to the consumer. (every business will be passing the higher running costs to the consumer from Medical Aides to Food shops etc)

Electricity is getting expensive (and unreliable at times although I have not really been affected by it) I can see this in our monthly bills, and even the levies we pay in the security estate are going up at our place in April by another R450 (We currently pay R1,400) the lending rates have gone up now and analysts are predicting it is the first of many to come. 6 months ago R740 filled my car and now R835 gets it to the top.

Australia may be a little bit more expensive but atleast it seems to be consistent, dont be fooled by the Rand/A$ you will have to consider a ton of things besides food, clothing and frail care. Look at inflation for the last year and see what analysts are predicting for the future, they say inflation is at about 6% but in reality its pretty far from this. Everyone seems to think Capetown is a safe haven, and it is most likely the best run province but for how much longer.

But at the end of the day you will have to make the best decision for yourself. I am coming with my little family to Australia because I think Australia looks after its people and well in RSA it does not exist.

ps. When we did our IETLS test 1 Feb, there must have been about 45 people in the examination all leaving for the UK or Australia...I thought that was a lot for just one exam on a weekend...and says a lot about the brain drain...which would have an affect on inflation in the future...

[patrice]

@ Gareth et. Al. - I think you are spot on - apart from trying to recover the budget deficit, we just need to add that the government spend is getting bigger, while the tax base is getting smaller (with the numbers of skilled people leaving)

But ….. On the up-side – your savings / pension does not have to be huge as the life expectancy is much lower there (especially considering the above comments on medical and other comments on crime)

Me - I came over @ 50 – and will be ‘working’ an extra 5 years to make up my savings before I can retire in Oz

[SurferMan]

Good on you garethphillips,

In 2010 when we left, the ONE doctor I saw at Hatmed was processing over 120 applications a month. He said he only does 457 and PR apps, as the money is good and its easy. (He checked us 4 over in 5 min flat)

In 2010 there were 11 centres doing these, average 5 doctors per centre....man there are a swag of people leaving. I am happy for the rainbow whatever come back to SA brigade. I am keen to see someone get real tax bracket details from SARS and analyse the lost taxes. My mate who used to do analytics for them said they have offset this my more efficient collection and aggressive techniques. he said by 2013/14 real fiscal strain would start to show, and by 2019-21 SA would be essentially stuffed.

[Bob]

After being in Australia for a certain number of years, you'd automatically qualify for an Australian old Age Pension. It is not a "contributory" pension like in Britain where you have to pay each week for 30 years or so to get a full old Age pension. In Australia you don't have to put into the system to get a full old age pension. You could sit like Buddha on the beach up in tropical Queensland, doing stuff all each day, and you'd still get your pension when the big day arrives.

The Australian old age pension isn't like the British pension, either, where Britain freezes the pension for its workers when they retire in Commonwealth countries like South Africa, Australia, New Zealand or Canada. The day you land in these countries to retire and take your Pommie pension, it's frozen at that amount for the next couple of decades. Too bad if inflation doubles or trebles over time for British retirees, where their old age pension buys less and less each month.

An Australian old age pension is indexed for Australian inflation for the life of the worker when it begins and is sent to any country around the world . . . . Malta, Greece, Britain, Ireland, New Zealand.

You have to be 67 years of age if you were born in the late 1950s or later to qualify for an old Age Pension from Canberra, but it is for life once started. You don't get the Supplementary bonus (around A$57 a fortnight) attached to the old Age Pension than if you were living in Australia to help with cheap prescriptions and the like, however.

The Aussie pension is means tested and has an pretty generous "assets" test to qualify for a full pension.

For me personally, being retired in Australia for the past 8 years almost, life is definitely "LG" (life's good!) '

Looking back on my life, there have been periods when it has been carefree and happy (childhood) and also times when it was tough (bringing home the bacon each week to feed mum, three kids, dog cat and a parrot as well as paying a mortgage, two cars and building a house)

Retirement has been one of those happier, less stressful and more carefree times of my life and living in Australia has been affordable with so many benefits thrown at me by the local State government and Australian national government.

I have a "Seniors Card", giving me cheap cinema tickets (half price), free public transport travel on buses, trains and trams around Adelaide, cheaper registration for my car/s, 10% cheaper house and car insurance, 33% cheaper rates on my property, only $5 prescription charges for any medicines, "bulk billing" at the doctor's (free doctor's visits), between 35% and 40% government subsidy on my private health insurance premiums instead of the usual 30% government subsidy, . . . . . . . . . . . . . the list goes on and on.

I pay NO income tax (once I turned 60) on my pension from work (superannuation), saving me about $7 000 a year and the government old age pension is tax free also while I choose to live 183 days (6 months) or longer in Australia.

Living overseas would involve me paying full income tax on my work pension (super) and my government old Age pension from the very first $.

I've thought of living in Spain or Portugal for a while, but the income tax involved and subsequent loss of income and all the extra perks (like free doctor's visits) would disappear, so this year my wife and I am just visiting Portugal for four months. We'll be back in Australia for a little over 183 days, too, to get everything tax free and avail myself of all the extras that other older Aussie residents get.

It's a tough life being an Australian retiree, but also great!

Edited February 19, 2014 by Bob

[Nev]

Friends of ours gave it up and went back to south Africa just before we moved over here, they have lost their opportunity to return now,

Just a few days ago their facebook update was "Wide awake, first the car alarm went off, and now the house alarm keeps going off and there has been shooting in the neighborhood",

Can you imagine what was going through their heads... and they have a 5 year old daughter, nope, im not going back,

[RYLC]

After all the expense of moving I always think it's a pity not to stay long enough to at least have the passport. At least then you've given yourself options and the money was not wasted.

[KalahariHarry]

@BOB,

Very informative post.

Explain again how you qualify for Aussie old age pension?

and clarify that comes on top and above your private pension?

LOL amazing!

Trev

[Guest May]

Grow old. Australians grow old South Africans hope they LIVE long enough to grow old. Sorry too much News24.

[Bob]

@BOB,

Very informative post.

Explain again how you qualify for Aussie old age pension?

and clarify that comes on top and above your private pension?

LOL amazing!

Trev

Well, Trev.

Spending several months in Britain last year, I got talking to a number of Old Age Pensioners there and contrasted their British old Age pension with our Australian old Age Pension.

They have to put into their old age pension system by paying 13.65 GB Pounds each week (goes up with U.K. inflation rate each year), for a 30 year period, soon to be extended to 35 years. If you miss out on any weekly payments, you can make it up later by paying all the missing weeks you've not paid into the pension system, or take a reduced pension. If you've missed out on a couple of years and only paid 28 years, say, out of 30 years, then you'd get a proportional old Age pension of 28 / 30ths of the full Age Pension there.

In Australia, you don't have to "contribute" each week for a set number of years. If you are permanently resident in Australia, then the clock starts ticking each day, week, month and year until you've clocked up the set number of years to qualify for an old Age Pension in Australia. You get nothing until that time has been achieved, so if you spend years in Australia and leave permanently a month or two before the qualifying period, you get nothing from the Australian government in your old age. Once you've qualified to get the Australian old age pension by simply living in Australia on a permanent residency visa, then you get the Australian old age pension and it will go with you anywhere in the world (Britain, South Africa, New Zealand, Zimbabwe, Namibia) and goes up with inflation each year, set to the inflation rate in Australia. It is paid in Australian dollars, and all Australian government payments like the old Age Pension are paid each fortnight (two week period).

If you live in Australia, to help with supplementary things like prescription bills, medicines, and so on, you get an extra "Supplementary Bonus" to your old Age Pension. This currently worth around A$57 a fortnight on top of your Australian old Age pension.

In Britain, workers are likely to also get a work pension (called "superannuation" in Australia) and this is paid along with a full British old Age pension of around 147 Pounds a week. 147 Pounds x 52 weeks = 7 644 Pounds a year. If you get a work pension in addition to your old Age pension in Britain, any amount of income over 10 000 Pounds a year attracts a 20% income tax, so if you got an old age pension of 7 644 Pounds + a work pension of, say, 12 356 Pounds, making a total of 20 000 Pounds a year, the first 10 000 Pounds would be free of income tax, but the rest (the remaining 10 000 Pounds) would lose 20%, or 2 000 Pounds in income tax. You would only see 18 000 Pounds a year in your bank account to spend.

In Australia, it's different. You get your full work pension (superannuation) with NO income tax once you turn 60, no matter how much a year you get.

However, once you get over a certain amount from your work pension, you lose 50% off your Australian old age pension, which is also tax free.

If you had No work pension at all, or only a very small pension from work, (no greater than A$7 000 a year), you'd get the full Australian old Age pension, which is currently around A$30 000 a year for a couple living together and not separated by choice or ill health (one in a nursing home, for instance)

Any super (work pension) over A$7 000 a year, you lose 50% off your Australian old Age pension, so if you got a super of A$27 000. which is A$20 000 over the $7 000 threshold, you'd lose 50% of the $20 000 (which is $10 000) off of your full old Age pension of A$30 000 a year. Your super (work pension) of $27 000 a year would only get you another $20 000 old Age pension ($30 000 less $10 000 off). You would get $27 000 super + a "part" pension of $20 000 = $47 000 tax free in the bank a year.

For me personally, I get far more than A$7 000 a year work pension, and I only qualify for a "part" pension because I get too much income from my work pension. I still get enough to live on comfortably and enough to travel if I wish, and I feel very fortunate compared to a lot of British pensioners I talked to last year and what they get by on each year. Many would only get half the income I get in the bank.

So . . . . in Britain, you all get the full old age pension, but anything over 10 000 quid a year is taxed.

In Australia, you don't pay income tax, but you don't get a full old age pension if your work pension is too great.

Either way, the government gets to keep a big chunk of money.

Edited February 22, 2014 by Bob

[Eto]

Good day Bob,

Many thanks for very informative mail posted, but i have a question related to your below comment if you dont mind

"After being in Australia for a certain number of years, you'd automatically qualify for an Australian old Age Pension"

How long do you have to work in Australia before qualifying for gov. pension? I have heard that it is 10 years and that the pension will also only be paid while in Oz?

Regards

Eto

[Bob]

Pete, my mate from South Africa, is hanging out for the 10 years to pass so that he can get the Australian old Age pension.

Years ago, I believe it was 25 years you had to put in the Australian workforce to get a pension, but it seems it's only 10 years now.

The Australian gov't does pay old age pensions overseas, as my wife has an old age pension. Women don't have to be 65 in Australia to get the pension, although it is progressively going that way for women.

I don't know if they will pay into a foreign bank account, as my wife got her old age pension put into an Australian bank account, then she had to transmit it to her HSBC account in Britain for spending money during the six months we had in Britain last year.

That is only a formality, and we found a great way to transmit funds . . . . . Ozforex, a Sydney international currency transaction company gave really great exchange rates to foreign banks in a number of countries from your Australian bank account. The money was in the U.K. bank (in Pounds Sterling) two days after sending it from our Australian bank.

Check them out

http://www.ozforex.com.au/currency-converter

Edited February 24, 2014 by Bob

[Eto]

Thanks Bob

[Donovan83]

The crime is enough of a reason not to go back I think.

In the last 2 weeks, I've had two of my friends being robbed. The one friend's house was robbed during the day, her parents were home but thankfully the guys just ran in and grabbed the TV and ran out again. The second one, a friend was home with her sister. Her sister went outside (in broad daylight) just to check on the pool pump, and was followed back in by 3 guys. Tied them up, robbed them etc. Kinda sick that the person that told me about it felt it pertinent to mention that "at least she wasn't raped".

I can't imagine dealing with that as a 65+ year old.

[chzaau]

The economic freedom fighter would love to have you come back and share your pension with 7 other unfortunate, un-privileged and desperate families that where bad done by the 300 years of slavery, discrimination, racism, apartheid and what every other stuff they can coin.

Jacob Zuma also needs as many tax payers as possible to help him, he has a very big family to feed and therefore he needs a very large social grant in the tune of a couple of millions per year + a 250 million housing grant to help him out, poor fellow.

Please come back and help us to help them.

[Nev]

Was watching Top Gear last night (Was on channel 7 Auz free to air TV) and the actor from the Sherlock Holmes series in the UK was a guest:

Jeremy Clarkson:

So you are the first guest we have had on who was Carjacked

Guest:

Yes when i was in South Africa we were hijacked, in the 2 hour ordeal i came to grips with my mortality about 4 times.

Fantastic......

Edited February 25, 2014 by Nev

[Bronwyn&Co]

Was watching Top Gear last night (Was on channel 7 Auz free to air TV) and the actor from the Sherlock Holmes series in the UK was a guest:

Jeremy Clarkson:

So you are the first guest we have had on who was Carjacked

Guest:

Yes when i was in South Africa we were hijacked, in the 2 hour ordeal i came to grips with my mortality about 4 times.

Fantastic......

At first I thought you meant Jonny Lee Miller from Elementary (noooooo!). Turns out it was Bendict Cumberbatch.

http://www.dailymail.co.uk/tvshowbiz/article-2085527/Benedict-Cumberbatch-Sherlock-star-talked-way-kidnap-attempt-South-Africa.html

[joweni]

Wow-this thread makes for interesting reading. As ex-farmers we relish our safe lives here-this feeling of security is beyond anything money can buy. I watched my in-laws get old in South aAfrica-virtually housebound. Here you can tap into all sorts of community help and things like Meals on Wheels, Home care/help etc this is a country that cares for their older population .....might not be perfect but pretty dam close.

[Enrica]

Why would you retire to South Africa? If you want third world go live in Bali cheap as South Africa but no violent crime!!!! If cheap is what you want

[RYLC]

Enrica I think people want familiar and cheap (which is understandable) but it's important to define "cheap" in all it's forms and decide if safety and medical deficiencies are worth it. There is a lot to be said for familiar although another word for it is rut. Migrating can be tough *sigh*

[Enrica]

I understand migration is tough etc etc, but we left our homeland out of choice for what ever reason, and safety and security featured as probably the most important reason as to why there is this dispora from South Africa, then why would you want to return in your golden years, when supposedly you want to live your years in peace and tranquillity ? don't understand that ,is that what is familiar to all of us...crime and violence. Life is cheap , cheap to live and cheap to take.

[chzaau]

Quite a lot of old people have been targeted lately and either killed, raped and then killed, raped, beaten to an inch of there lives etc. I am not sure if you would like to live here without a support network at least.

They had a episode on Carte Blanche a while back where they where beating old people in the old age home.

[Johnno]

Many Saffa's arriving or planning on arriving in Aus or UK believe that their new governments will take care of them in their old age and pay them a handsome pension. Regardless of where you live you need to make sure that you have provided some kind of self funded pension, RA or whatever because governments do not and cannot provide every retiree with a home, pension and medical care that they need. Family support is probably the biggest benefit for a retiree, especially if they are need day-to-day help.

If you rely 100% on government and you're lucky enough to get a roof over your head you could land up like these poor souls In Sydney!

http://aca.ninemsn.com.au/article/8799683/seniors-living-in-public-housing-prison