Seniors head overseas to stretch their savings
THERE is a lot to think about if you're considering retiring overseas, and much of it comes down to money and community, according to WorldFirst head of foreign exchange, Patrick Liddy
New Zealand was the number one destination for Aussies looking to retire overseas, he said, citing WorldFirst's analysis of thousands of pension-type international transfers by customers across 2016 and 2017.
It was closely followed by the UK.
The figures didn't surprise Patrick, with many of those transfers made by people returning to retire in their homeland after working in Australia, often earning bigger dollars than they could at home.
Others, he said, looked at New Zealand as being both culturally and geographically close to Australia but potentially giving them a better standard of living, with house prices, groceries and eating out all costing significantly less in New Zealand.
"It's just a quick flight across the ditch, but your money goes a lot further and that is something pensioners are becoming a lot more aware about: as people are living longer, they are looking to make those savings dollars go further," Patrick said.
Having links to family and friends overseas, similar cultures, and "a community you can just walk into" were also enticing, as was the fact that funds could be transferred to New Zealand within one business day.
Singapore had the third highest proportion of pension money transfers, closely followed by Thailand, and then the USA.
"We're definitely seeing an increase in Asian destinations," Patrick said.
"You can live like royalty in Thailand for a modest amount in Australian dollars, and it's a stunning place."
On the other hand, it's Singapore's strong economy which appears to be drawing Australian expats, despite its high cost of living.
The important thing if thinking of moving anywhere overseas, Patrick said, was to do your research and move your funds at the right time.
"When you're looking at a bulk transfer of your savings, maybe $1 million, you want to make the most of your dollars," he said.
For instance, the change in the market of Australian to US dollars over recent months from over 80c in the dollar to 73c equates to about $100,000 if transferring $1 million.
Those who emigrated to the US four years ago, when the Australian dollar was particularly strong against the Greenback, would be 20% better off than if they exchanged the same amount today.
"You need to do your research and look at future currency projections," Patrick said, particularly with economic uncertainty, current threats of trade wars with China, and US volatility.
WorldFirst offers a unique Forward Contract, which allows customers to lock in a rate of exchange available today and settle the contract in anything up to two years, according to when they want to actually make their move.
Alternatively, you might want to transfer smaller amounts on an ongoing basis, depending on rates, investments and circumstances.
The best thing, Patrick said, was to get professional advice on what was best for your individual financial position.
* WorldFirst (worldfirst.com.au) manages international payments across 45 currencies and promotes its exchange rates as up to seven times cheaper than offered by the big four banks.