01

Considering an offshore retirement? Four things to do before you go

Australia has become an expensive place to live, so it’s not surprising that the lure to retire at an idyllic, low-cost, offshore location is getting a lot of attention. We discuss the pros and cons.

If you’ve holidayed overseas recently, you’ll know how much further your Australian dollar can go – particularly in Asia. An income that would be considered frugal in Australia is likely to fund a very comfortable lifestyle in some overseas locations.

This is because food, transport, housing and domestic services are often a fraction of what they’d cost back home. Adding to the lustre, these affordable lifestyles can include beach-side living and a tropical climate.

However, before making any firm plans to turn your holiday into a permanent home, it’s important to consider all the implications.

1. First do a trial

Visiting a place on holiday is very different to living there. So before making any decisions, try living in the location for between six to 12 months. That way you can make sure you’ll be happy, healthy and safe.

During your trial, ask yourself these questions:

• How easy it is to make new friends? And are you comfortable being away from your relationships and life in Australia?
  
• What’s day-to-day life like? How safe and secure is the neighbourhood? Are utilities and transport available and reliable?
  
• Are the local cultural expectations a good fit for you? Do local values suit your lifestyle?
  
• What’s the climate like year-round? And is it helpful or harmful for any medical conditions you have?
  
• What are your legal rights? Are you able to rent, buy property, own a car, or get a driver’s licence?
  

2. Check out the visa requirements

Research what visa you'll need to live in your chosen country long-term, and if you’re able to stay without being a resident. Most visas need regular renewal and there’s often a limit as to how often you can renew.

If you plan to move permanently you may be able to apply for permanent residency, however this may be complicated and time consuming.

What’s more, applying for residency overseas may affect your Australian tax residency status, with possible implications for your banking and your super payments.

3. Consider the medical services and cost

Access to healthcare is a key priority, so carefully evaluate the standard and cost of healthcare in your target country – and what would happen if you got critically sick. If you take medication, make sure your medication is both legal and available.

Neither Medicare nor Australian private healthcare funds will pay for your medical treatment overseas. While Australia has reciprocal healthcare agreements with some countries, elsewhere you'll have to pay your healthcare costs in full.

4. Assess the financial implications

Consider how you’ll manage your superannuation and pension payments, and where and how you'll do your banking. You’ll also need to consider how fluctuating currency exchange rates could impact how much money you get and how far it goes.

Super pensions and lump-sum payments have tax concessions in Australia, but this might not be the case in the country you're relocating to. Make sure you understand the local financial laws and tax implications to avoid breaking them or paying double taxation.

If you move overseas, you may still be eligible for an Australian Age Pension, but it may be less than what you would receive in Australia. The Smart Traveller website is a good place to start your research.

How we can help

Retiring overseas can have big implications for your wellbeing, your super, Age Pension benefits, and tax obligations. While we’ve touched on some of the considerations in this article, it’s important to get early, expert advice from your financial adviser. We can advise you on the financial implications, taking into account your circumstances and goals.

02

Why the push for companies to do the right thing is good for Australian share market investors

As tensions between Australia’s largest companies, their customers, and the federal government flare, companies such as Woolworths, AMP, and Qantas are placing a higher priority on measuring their community reputation. We discuss why a company’s reputation is important to investors and examine the implications for your retirement savings.

Reputation is fundamental to share market performance

Across the Australian community, there’s a growing expectation that businesses should have a positive impact on the societies they’re part of. Simply put, do the right thing – and be seen doing the right thing.

A good reputation builds slowly over time. When a company’s reputation is healthy, it can attract the customers, workers, suppliers, and financiers it needs to operate. This in turn provides fertile ground for the company to grow, earn income, and pay dividends to shareholders.

In contrast, a company with a bad reputation may face boycotts, find it hard to recruit staff and be on the receiving end of unwelcome government and media scrutiny.

When the right incentives are in place, market forces can encourage business executives to act with integrity, actively engage with stakeholders, listen and reflect on concerns raised.

Companies experience community wrath

An example of how rapidly a bad reputation can destroy shareholder value was when the price of AMP shares dropped between March and October 2018 from a high of $5.47 to $2.31. That’s a remarkable fall of over 50% in the space of six months.

This was precipitated by the fallout from AMP being found to have mislead Australia’s corporate regulator – the Australian Securities and Investments Commission – over its involvement with an independent report and fees-for-no-service following the 2018 Financial Services Royal Commission.[1]

More recently, in April 2024, executives from Woolworths and Coles were called to a Senate hearing to address rising community anger about supermarket prices and company profits in the face of cost-of-living pressures. At the hearing, Woolworths departing chief executive, Brad Banducci was warned that he could be held in contempt of the Senate and face potential jail time after repeatedly refusing to answer a question about Woolworth’s profitability.[2]

Qantas has experienced similar hits to its formerly first-rate reputation, becoming the most complained about company to the Australian Competition and Consumer Commission. Qantas faced a class action from angry customers who were unable to get their money or points back after flights were cancelled due to COVID-19.[3]

Then, at a Senate select committee hearing in August 2023 into the cost-of-living, Qantas chief executive Alan Joyce evaded questions about high fares.[4]

Reputation set to become a higher priority

The takeaway from these high-profile cases is that they’re compelling a growing number of companies to realise they must close the gap between community expectations and corporate behaviour.

Boards are doing this by including reputation metrics in their executive incentive schemes. For Woolworths, vesting from 2024, a reputation metric now accounts for 20% of executives’ long-term bonuses – replacing targets measuring sales per square metre.[5]

Other companies that have also introduced reputational metrics into executive bonus plans include Qantas, as well as the Commonwealth Bank and AMP.[6]

AMP says that including reputation as a metric – accounting for 30% of executive long-term bonus plans – helps it meet the requirements of a new standard imposed by the Australian Prudential Regulation Authority (APRA).[7]

In CPS 511, APRA-regulated entities are required to incentivise executives to manage non-financial risks and foster sustainable performance.[8]

When the behaviour of companies is held to account, companies are forced to take responsibility for their actions and more carefully manage their risks. This in turn helps strengthen the value of companies, along with your share investments in them.

Talk to your Count Financial adviser

If you’d like to discuss the any of the companies that make up your investment portfolio, please talk to us.

[1]ABC News, ‘Blood in the streets’ as AMP shares plummet to record low, 26 October 2018, accessed 2 May 2024.

[2]SMH, Woolworths chief Brad Banducci threatened with jail time at Senate supermarket inquiry, 16 April, 2024, accessed 2 May 2024

[3] AFR, Qantas sued over ‘misleading’ flight credits, refunds, 21 August 2023, accessed 2 May 2024

[4] AFR, Labor aims to ‘protect’ Qantas profit, Joyce clashes with senators, 28 August 2024, accessed 2 May 2024

[5] AFR, A hot tip for CEOs – reputation counts for everything, 21 April 2024, accessed 2 May 2024

[6] Ibid

[7] Ibid

[8] APRA, Prudential Standard CPS 511, August 2021, accessed 2 May 2024

The numbers

This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. This document has been prepared by Count Limited ABN 11 126 990 832. Your financial adviser is an authorised representative of Count. Information in this document is based on current regulatory requirements and laws, as at 1 June 2024, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document. Your adviser may not be a Registered Tax Agent, consequently tax considerations are general in nature and do not include an assessment of your overall tax position. You should seek tax advice from a Registered Tax Agent. Should you wish to opt out of receiving direct marketing material from your adviser, please notify your adviser by email, phone or in writing.