How to plan for retiring overseas – Diana Clement

Planning retirement overseas requires a visa, health insurance and understanding of tax implications and legalities. Photo / 123rf

THE FACTS

• Retiring overseas requires careful planning, including visas, health insurance and understanding New Zealand Superannuation rules.
• Healthcare costs can be significant, with options like local insurance or global policies such as Cigna Global.
• Managing investments and foreign exchange is crucial; setting up a local bank account may be necessary.

Many a Kiwi dreams of retiring somewhere exotic overseas.

They imagine themselves just like the adverts: walking down the white sand beach barefoot.

But you shouldn’t just jump on a plane and leave.

You need a visa, health insurance, and your investments. And read my two articles about New Zealand Superannuation from last year:

• How to avoid being caught out by NZ Super rules when retiring overseas – Diana Clement
• What happens to your superannuation payment if you retire overseas – Diana Clement

How you pay for healthcare in your new home is crucial, but NZ Super is just the beginning in planning a retirement overseas.

There are other tricky questions that I will cover over the next two columns. Do you still pay tax in New Zealand? What happens when you become too frail to look after yourself? What about your will? Is it legally valid overseas? Will there be inheritance tax in your country of residence?

Healthcare: What happens when you’re not in the NZ system?

We’re spoiled in New Zealand, with a pretty good health system. If you’re retiring to Australia, you will get some free healthcare. But for most countries, you need to fund your own treatment, and that means getting health insurance.

There are global policies such as Cigna Global, Bupa Global and Allianz Partners. For this article, I’ve used Thailand as a test case. A hospital-care-only policy with one of these providers, without outpatient care, started from $7180 a year for a 70-year-old and $10,887 for an 80-year-old.

It can be a lot cheaper to buy local health insurance. It requires a leap of faith because you don’t necessarily have access to an Ombudsman service as we do here. I checked AXA Thailand, a globally owned, local insurer. A 70-year-old retiree on an O-X retirement visa would pay around $2200 a year, with an excess of $5000. The website would not give a quote for 80-year-olds.

What about travel insurance?

I heard of one retiree who would fly back to New Zealand annually and take out an annual travel policy, so I checked if terms and conditions (Ts&Cs) of New Zealand policies supported that workaround. AA Insurance’s 365-day policy for a 70-year-old retiree with no pre-existing medical conditions was around $3000. However, the Ts&Cs required that New Zealand be your normal place of residence, where you planned to return. Insurers find out if you try to pull a fast one on them. Then your $100,000 medical bill isn’t covered.

Southern Cross Travel Insurance covers retirees under its Working Overseas travel insurance policy. An annual policy was around $2500 for a 70-year-old with no excess. You’d need to pay additional premiums for pre-existing medical conditions, high-value items and excluded risks such as riding a motor scooter, as many retirees do overseas.

The “but” is that it wouldn’t work for someone in the scenario of being retired overseas, because it can only be used for two consecutive years. What’s more, the Ts&Cs specify that the person needs to be returning to New Zealand at the end of the two years.

That raises other questions, such as can you fly back to New Zealand for medical care? If you’re not ordinarily resident in New Zealand, then the answer is largely “yes”, although Health New Zealand Te Whatu Ora said you can’t register with a PHO (GP).

What about your investments?

Investments and foreign exchange are also an issue for anyone retiring overseas. Moving money around the world has become a lot easier and cheaper thanks to services such as Wise and Revolut, although they don’t come under New Zealand’s Banking Ombudsman if something goes wrong. Most likely, you’ll want to set up a bank account in your new country of residence. In some cases, you must.

If you intend to keep investing in New Zealand, do make sure that the platform allows non-residents to invest. Or talk to your financial adviser, if you have one. Catherine Emerson, chief customer officer at Kernel, said existing customers can keep investing and withdrawing. Non-customers would find it very difficult to open an account once they’d left New Zealand, thanks to anti-money-laundering laws.

Final thoughts

I can’t possibly cover every permutation. This primer is designed to get readers thinking.

I’d love to hear the experiences of those who’ve already taken the leap. diana.clement@nzme.co.nz.

The second half of this column covering death and taxes will run on September 7.