When the serene beaches of Bali or the historical streets of Europe beckon, the idea of retiring overseas becomes not just a dream, but a tangible possibility for many Australians. While the thrill of a foreign retirement holds undeniable allure, it’s essential to understand the implications this decision may have on your age pension entitlements.

At Wealth Factory, we’re committed to ensuring that our clients are well-informed. In this article, we dive into what happens to age pension entitlements for Australians who venture overseas for their golden years.

Can you still receive the Age Pension overseas?

In short, yes, you can still receive the Age Pension even if you decide to move overseas permanently. However, how much you receive and other conditions largely depend on how long you’ve been an Australian resident and how long you intend to be overseas.

Residency Requirements

The primary factor affecting your pension while overseas is the length of your Australian residency. To continue receiving the Age Pension abroad:

You must have been an Australian resident for at least 10 years in total.
Alternatively, you must have been an Australian resident for at least five years continuously during your Australian working life (between the age of 16 and age pension age).

Duration overseas and pension rate

The length of your stay overseas directly affects the rate at which you receive the Age Pension:

For short trips (up to 6 weeks): Your pension rate remains unchanged.
For longer trips or permanent relocation: If you’ve been an Australian resident for over 35 years, you’ll receive the full Age Pension. However, if your residency has been between 10 to 35 years, your pension will be prorated based on the number of years you’ve lived in Australia. For instance, 20 years of residency would equate to receiving 20/35ths of the full Age Pension.

The assets and income test

While abroad, the assets and income test still applies, which may affect your pension rate. It’s essential to update Centrelink with changes in your circumstances, as variations in exchange rates, foreign assets, and overseas pensions can impact your Age Pension.

Waiting period after moving

If you decide to move overseas and have been abroad for over 26 weeks, your pension rate will be determined by the length of your Australian residency. If you return to Australia, there’s a waiting period of 2 years to regain the previous Age Pension rate based on living in Australia. This waiting period only applies if you have been overseas for more than 26 weeks.

Obligations and notifications

Always inform Centrelink before moving or travelling overseas. Your pension might be reduced or even cancelled if you fail to notify them within 28 days of your departure. Additionally, regularly check your obligations; rules can change, and staying updated is vital to avoid potential issues.

Healthcare considerations

While the Age Pension can be accessed overseas, the Australian Government health benefits might not be available. Consider health insurance in your chosen country and understand the local healthcare system.

Conclusion

While the prospect of retiring overseas holds charm and potential financial benefits, understanding the implications on your age pension is crucial. It’s always recommended to seek professional advice tailored to your individual circumstances. At Wealth Factory, we’re here to guide you, ensuring you make informed decisions for a peaceful and fulfilling retirement, wherever it may be.