MY MONEY

Ask Paul: I left my wife and moved to Thailand, can I get a pension?

By

I am in the process of divorcing my wife and have moved to Thailand while my wife plans to remain in Australia.

At age 70, optimising pension payments is critical for me. We have about $400,000 each in superannuation and the sale of our house should net me about $300,000.

My wife plans to remain in Australia, buy another family home, and use this to keep her assets below the level where they will affect her pension.

paul clitheroe paul ask paul askpaul money magazine advice disability pension term deposit invest divorce women super 600,000 mortgage estate savings investor financial planner

My situation is more complex as I will be living in Thailand permanently.

After the divorce my assets, including an SMSF, will be about $700,000 - well above the level to get a part pension.

If I buy a condo in Bangkok, Centrelink will not regard it as my family home and the cost will be included in its asset test.

If I were to leave the $300,000 in Australia and get, say, 2.5% interest ($7500) I would need to pay non-resident withholding tax, which I do not believe I can claim back.

It may be better to transfer the $300,000 to a Thai bank, although I may pay interest there as well.

My rent and living expenses in Bangkok are around $30,000 a year, which I am unable to lower further without living in a shack.

Bangkok is one of the most expensive cities in Asia. Living outside Bangkok, where living is cheaper, has no appeal to me. - Robert

Goodness, Robert, I am so far out my depth here, even flippers and a snorkel will not help me. I'll need diving gear.

It seems to me that you simply forget the aged pension for the time being and invest as well as you can, while living in Bangkok, or you consider returning home and buying a home here in future years and qualifying for a part pension.

I think an expat-type adviser would be valuable here. There are a lot of variables.

It may be you could make an undeducted contribution to super with the $300,000 from your home.

At age 70 there are various restrictions around this that you would need to understand, but super, which is obviously money you can access, may be a great way to get good returns from a large, low-cost manager.

Rent and living expenses of around $30,000 are of no concern to me.

In my overly simplistic example, if you had $700,000 in super, or other investments, an annual draw of 5% would give you $35,000 a year.

There are no guarantees, but with low inflation and historic earning rates on super, as a 64-year-old I am certainly happy to draw over 5% a year from my super for lifestyle spending.

RELATED STORIES

Paul Clitheroe AM is a respected financial adviser and Money's founder and editorial adviser. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
Comments
Craig Beasy
January 1, 2020 7.49pm

G'day Paul & to Robert as well. With respect to Robert's future Bangkok residential intentions, may I advise & encourage him to cast a much wider net re permanent retirement residency options. I recommend he Googles " International Living Australia ". This is a well respected expat retirement living website that is dedicated to providing good, verified retirement options on where to live quite comfortably on SMS returns, investments, pensions, or part there-of.

The loads of info in ILA are from retired Aussie expats who now live permanently overseas after having crunched the numbers, did due diligent research & discovered all living costs elsewhere on our planet are up to a 3rd or 1/4 of comfy struggle street in Down Under.

Importantly so, ILA only recommends & promotes safe living options i.e. Countries, where one's retirement income stretches so much further & healthcare options are of a high standard, often equal to Australia's, but costs substantially less across the board.

Cheers Robert; best of luck in finding what's entirely suitable to your retirement budget & long may you enjoy it.

Andrea Jenkins
January 2, 2020 6.32pm

Hi Paul and Robert, as a qualified financial planner, I would also suggest you get specialized financial advice but more importantly, I would like to point out that the age pension is only able to be claimed when you are in Australia and will be cut off or reduced if you leave the country either temporarily or permanently. Definitely warrants further investigation

Christina Faulk
January 3, 2020 11.22am

Hi Paul - I taught English as a volunteer to students with a disability at the Fr Ray Foundation in Pattaya, Chonburi province, where many of the ex-pat teachers had retired. IMO, Pattaya (and other Thai towns like Hat Yai or even Chiang Mai (in the mountains, lovely cool climate) are much more liveable and cheaper than BKK ! One of the other permanent-in-Thailand teachers found his UK pension diminishing due to the strengthening baht, but still manages to rent a modest place, with maid service, and keep his car. The Thai government has recently cracked down on the so-called 'retirement visas' (which needed to be renewed, I think, every three years, but its still good value. And living in Thailand, outside BKK, is still very enjoyable and cheap.

Post a comment
Link to something T6rGJ9Qj