IS RETIRING OVERSEAS A GOOD OPTION FOR SOUTH AFRICANS?
A look at some factors to consider.
Before I delve into the article, I want to thank all the people who showed interest in joining my retirement community. The response has been overwhelming, which clearly shows that there is a massive need for support and guidance around not only the money matters of retirement but also the non-financial challenges.
Please see my previous articles about the non-financial aspects of retirement, and if you would like to join my “retirement community” aimed at everyone who is interested in retirement or retirement planning, please email me directly at marius@wealthup.co.za.
Read:
What you plan for retirement and what you get is often very different
The key to successful ageing and retirement
This article was prompted by a respondent who is now also a retirement community member.
One year ago, this person retired to Mauritius. For those who don’t know, Mauritius offers one of the most attractive and affordable retirement options for South Africans. I personally investigated this option for myself. Their requirement for a 10-year retirement visa, renewable for a further 10 years, is that one must have US$1 500 paid monthly into their Mauritius bank account as a regular income.
The source of the income is of lesser importance (it obviously must be from a legal source), but the sustainability thereof is important. There is no requirement to invest in any government schemes or a requirement to buy property. Living on an idyllic tropical island sounds like a dream come true. But is it?
I mention Mauritius, but the challenges are the same across the globe. Whether you decide to retire in Greece, Portugal, Australia or any other foreign country, the challenges are universal.
Let’s face it, South Africa is a fantastic country, but we have serious challenges. We are all aware of the collapsing infrastructure and political mayhem, which includes corruption and BEE demands that place a huge strain on career-oriented young people who do not fall into the BEE space. This has inspired many youngsters to search for greener pastures across the ocean in different directions. It is interesting that the number of individuals who qualify for BEE status and who are also looking for greener pastures overseas is increasing.
Many South African families are now split between two or more countries. Many people close to retirement are considering Mauritius, Portugal and many other countries that offer golden visas and other incentives to entice them to take their hard-earned cash to their shores. So how are these people faring?
Considering the depreciating trend of the rand against all developed countries’ fiat currencies, it stands to reason that to afford a retirement overseas one needs to accumulate substantial wealth, especially where the conversion ratio is greater than 10:1 and where property ownership and rentals are expensive. Mauritius is probably one of the few exceptions.
So, let’s for a moment assume that affordability is not a problem and that one has sufficient capital to maintain a decent standard of living. If this is the case, surely there is no problem, or is there?
When we discuss retirement, we tend to get caught up in the financial details of what is required for a successful retirement. In my previous article, The key to successful ageing and retirement, I dealt with the five fundamental non-financial areas that lead to successful ageing/retirement with the acronym PERMA (I added F to take financial importance into consideration). I am not going to elaborate on them again, but for people who move overseas, all the challenges of PERMA(F) apply.
I just want to point out that we must be very careful when we research something like happiness in retirement. Most of the research and data available originates from the United States, where people seem more content and happier in retirement than in SA. The reason for this is that the US, like some other developed countries, provides a social security grant. In basic terms, this is a government-sponsored retirement scheme.
In the US, as a citizen, you have the choice to start receiving income from government from age 60 or you can wait until 65 and receive a higher monthly income. In many cases, this social grant provides a larger part of many individuals’ retirement income. In SA, we are responsible for our own retirement fund accumulation, and as we know, this is a mammoth task and can easily go astray. This in itself places South Africans at a disadvantage and raises stress levels and negative connotations towards retirement.
Many South Africans fear the prospect of financial hardship in retirement, some without reason. South Africans do experience more stress close to and in retirement compared to Americans and Europeans for the mentioned reasons. Take the statistical data found on the web with a pinch of salt. The data is not linked to South African realities, and it most certainly does not mean that the statistical data will apply to you as a South African if you move to another country, including America, because you will not qualify for the social grants applicable to those countries. This means that to lead the same quality of life, you will need more capital than those residents who do receive grants. This in itself is a stressor.
My new Mauritian retirement community member is having a really hard time trying to deal with the challenges of retirement in a foreign country. Loneliness and boredom are currently making retirement very difficult, even on a tropical island. As I mentioned in my previous article, loneliness is twice as deadly as obesity. My Mauritian retiree is experiencing the typical “honeymoon phase” where things are fantastic then, after a while, reality sets in.
What are the challenges that one faces in a foreign country? (More than in your own country.)
Lack of a community. We are pack animals, and we need to belong. Considering the different cultures and habits of other populations, “belonging” does not come naturally. Very few communities welcome foreigners with open arms. That is why we find ex-South Africans congregate in certain areas of countries like Melbourne and Sydney in Australia and the North of Mauritius.
Language barriers. Although the official language in Mauritius is English, the locals still favour French and Creole. The same applies to Europe where Italian, French, Spanish and German dominate. Many European countries are quite hostile towards English-speaking individuals. It sometimes pays to communicate in Afrikaans just to hide your English heritage. This strategy seems to pay off more often than not, even though one often gets mistaken for an Australian or a Russian …
Getting involved in the community is particularly difficult. Identifying community projects and getting involved is not as easy as it seems. The language barriers in these areas are even greater. People are also happy to accept your money but less so to receive your physical help. This leads to a feeling of being used.
Difference in laws. Not all countries have the freedom of movement, religion and speech as SA. Many countries abide by Muslim laws, but not all South Africans are accustomed to these restrictions.
Strict law application. South Africans often run into the law in Australia (which is probably the closest to SA) because of smoking, littering, speeding and general conduct. South Africa is more lenient with the less lawful (not sure if this is good or bad).
Being stuck in a foreign country while your family and children are elsewhere has its own challenges. The freedom to just hop in your car and take a drive to them or pick up the phone and speak with them without the challenge of different time zones is priceless.
Some of the above factors contribute to the fact that over the past five years, almost 400 000 individuals have returned to South Africa. I know there is a growing trend for more and more South Africans to leave SA, and I understand why. Just make sure of where you are going. The grass is not always greener on the other side. With the influx of foreigners and fugitives to various countries, including Europe and the US, their dynamics are changing with more homeless people and rising crime rates.
As much as I love Mauritius and other fantastic destinations, I always enjoy coming back to my home country. The Western Cape is special to me and, in my opinion, one of the best destinations in the world as far as quality of life, affordability and friendliness are concerned. Maybe semi-grating to the Western Cape or Southern Cape is a good alternative. Over the past year, almost 150 000 people moved to the Western and Southern Cape from other regions. This is a good indication that South Africans are starting to consider this alternative as opposed to moving across the ocean.
Read my previous article and try to figure out how you are going to apply PERMA(F) in a foreign country. The ERM part is going to be particularly hard if you move to a region where you have no support or friends. Engaging with foreigners and building Relationships with them is a challenge, especially if you are the odd one out. Giving your life Meaning without interacting and being an active member of the community is all but impossible.
The above factors are manageable, but it will not be easy. It will take thinking outside the box. A good start will be to connect with fellow South Africans who have been in your new country for a while. They often have social or support groups. If they don’t have such groups, maybe that can be your first project to start such a group…
Also, remember that the quality of friends and relationships is much more important than the quantity of friends and relationships.
Good luck to all of those who are considering retiring overseas or who are already there. I sincerely hope that you find the peace and life that you are entitled to.
Happy retirement.
