Nanna

[Nanna]

 is anyone able to confirm or advise on the annual cost of living for a retired couple in Australia.   we have been advised that a sum of $50,000 is more than sufficient for the annual cost including the running of a car, house ,swimming pool , food , house and car insurances and general day-to-day living etc

[Quoll]

Not if that includes rent/mortgage. We are mortgage free and even some time ago, paying everything (except the rates) on the credit card then paying it off, our average monthly spend was $5k - we didn't stint ourselves but neither were we profligate.  There are all sorts of things like health insurance, technology, medical costs, holidays, hobbies, gym - they all add up.  I'm guessing you wouldn't want to be restricted in any way but that would be about as low as you would want to go for comfort. If you have a mortgage or rent to pay, then all depending on where you are, factor in another $2-3k per month.

[Nanna]

Many thanks. That has certainly helped and if it includes all you and I have listed we would be ok. Worry now is the Exchange rate on future uk pension transfers!!

[NickyNook]

Agree with Quoll on this one.

$50k is about right for living expenses only (not to include any housing costs) for a couple. 

We spend about that on average each year. Includes food, drink, running a car, health insurance, all bills, occasional eating out etc. 

I would add that you wouldn't be able to afford long overseas holidays for that figure but you could manage shorter, local ones. 

[Nanna]

Thank you so much.  We are feeling more positive about finances now. 

[Whey aye]

$50K should be OK,as long as you have no rent or mortgage.

Rummage through ASFA they give what they think are reasonable figures.I think they are a bit high,but better safe than sorry 

 

One drawback would or could be your UK pension.Unless things have changed then once you have left the UK to live in Australia you do not get annual increases 

 

I don' t know how much the UK pension is but if it is £160 per week,then it stays at that for the rest of your life,or return to the UK.Probably pay you to check that out.

Cheap holidays can be had by housesitting.Health is easy,all the lovely weather,depending on where you live.Take up cycling, an hour or two a day is very good.There are lift your own weight machines in a lot of places,sit up  benches etc.That is in Perth,I make the most of them on a daily basis.The weather is good enough for everyday exercise,possibly 5 - 10 days a year when it rains or Xmas day etc.

[VERYSTORMY]

Be aware though that if relying on a UK pension, the amount will be frozen. So, no increases. 

[Nanna]

That's a slight worry - but then the increases aren't normally huge although every little helps doesn't it.  I think a bigger concern is that even when the permanent residency is granted any medication needed has to be paid for whereas in the UK it is forever free and no one has a crystal ball to know what's in front of us.

[Marisawright]

57 minutes ago, Nanna said:

That's a slight worry - but then the increases aren't normally huge although every little helps doesn't it.  I think a bigger concern is that even when the permanent residency is granted any medication needed has to be paid for whereas in the UK it is forever free and no one has a crystal ball to know what's in front of us.

It may not be much of a problem in the first few years, but the longer you live, the more of a problem it will become. 

Let's say you're 65 now, and you hope you'll live till you're 85. That's 20 years.  Every year, inflation will go up,but your pension won't. 

Let's say you had come to Australia 20 years ago, with a pension of $17,000 a year (for a couple).    Imagine if it was still $17,000 today. Can you imagine trying to live on that?

Bear in mind that you also don't get free travel on public transport.

Edited May 8, 2019 by Marisawright

[Quoll]

It's not just the freezing of the pension it's the variability of the exchange rate - you could be living like a queen one day and a pauper the next if the pound falls against the dollar. But the freezing certainly doesnt help.  I think a bigger concern - as some have found to their cost - is not "when" permanent residency is granted as much as "if" permanent residency is granted.  There are all sorts of stories of folk who have found that out the hard way - having been in Australia for a while and sold up everything only to fail the medical to be permanent and then selling their sob stories to the papers.  Have you thought about the straightforward CPV and regular visits until its granted?

[ramot]

12 hours ago, Nanna said:

That's a slight worry - but then the increases aren't normally huge although every little helps doesn't it.  I think a bigger concern is that even when the permanent residency is granted any medication needed has to be paid for whereas in the UK it is forever free and no one has a crystal ball to know what's in front of us.

It’s only the state pension that’s frozen. If you receive any other pension, it’s not frozen. I haven’t worked out how much my state pension would now be worth after frozen 16 years, but as a female who wasn’t due a full pension it’s not massive. Yes I did top it up to maximum. My husband on full pension for 10 years has lost more.

We have lived in Australia for 16 years as retirees and our income comes from UK. and the exchange rate has fluctuated from $3 to the pound to an average of $1.8 recently. So work out your finances on the worst scenario.

Reference the cost of medication, yes your scripts cost, mine are $39 or less. We don’t have PR, but as far as I know there is a safety net, if your combined scripts, husband and wife if applicable, reach a certain amount before the end of the year, you get a reduced rate, I think $6 but please check this out.

Unless you go to a bulk billed Dr. you pay to go to the Dr. again I don’t know the cost after Medicare rebate.

As a retirees we love living here, as UK there are clubs etc for almost every interest or hobby. The climate suits us, yes 3 months of summer are hot and humid, you need aircon, but the other 9 months are perfect, we know many many retirees who also love it, but it’s not for everyone.We are on the Sunshine Coast .

Hope that helps, from someone who has actually retired here from UK.

ps we had our medicals for PR recently and they were only interested in any current health conditions, they aren’t out to trap you. I have a heart condition, osteoporosis, and also a friend in his 80’s also had his medical recently, he has had a hip replacement, doesn’t walk all that well plus other 80 year old problems, we all were fine.

Edited May 8, 2019 by ramot

[Paul1Perth]

On Tuesday, May 07, 2019 at 05:42, NickyNook said:

Agree with Quoll on this one.

$50k is about right for living expenses only (not to include any housing costs) for a couple. 

We spend about that on average each year. Includes food, drink, running a car, health insurance, all bills, occasional eating out etc. 

I would add that you wouldn't be able to afford long overseas holidays for that figure but you could manage shorter, local ones. 

I've just started getting the UK pension and was pleasantly surprised how much I get. I didn't do any top up either and we left in 92. I also get an NCB  pension and a Ferranti one which started last month too. I may have another that I will chase up. We have paid the mortgage off and both work part time at the moment.

When the Aussie pension kicks in in about 2 months I may quit work altogether. I think we'll be OK. We live near the beach in a nice place with a great climate so if we can't afford a holiday abroad we won't miss it too much. 

What do you really need to be happy when you're  older? That's the question. 

In our case nothing expensive.

[rammygirl]

How do you find the tax on the UK pensions, did you get a lump sum?  Just trying to work out what the ATO will cream off!

[Marisawright]

3 hours ago, Paul1Perth said:

When the Aussie pension kicks in in about 2 months I may quit work altogether. I think we'll be OK. We live near the beach in a nice place with a great climate so if we can't afford a holiday abroad we won't miss it too much. 

In the OP's case, they would be living in Australia on a bridging visa (and if it's the 804, it would be many years), so they wouldn't be eligible for the Australian pension.

[Marisawright]

3 hours ago, rammygirl said:

How do you find the tax on the UK pensions, did you get a lump sum?  Just trying to work out what the ATO will cream off!

When you say UK pensions, do you mean the government one or the private ones?

For a private pension, I believe the portion that represents "personal contributions being returned to you",  is either no tax or a reduced rate.  But do'n't ask me how that's worked out. 

Otherwise, when you get a lump sum of any kind, it is simply added on to your income for the year, and then the tax is calculated on the whole amount.  So, say your income was $30,000 but you got a lump sum of $100,000 from the sale of an investment.  That means for that year, your income is $130,000 - which pushes you up into a high tax bracket.   

So it's impossible to give a general answer to "how much will a lump sum be taxed",  because it depends what your normal income is in thta year, and how much the lump sum is

Edited May 9, 2019 by Marisawright

[Nanna]

We've just arrived at that pension situation.  On private pensions you can release 25% tax free. Over and above that % is taxed according to your annual income.  First £12500 on annual income is tax free. Anything over that is 20% up to about £38k.  Above that it's taxed at 40%.

State pension now is £657 per month for a single person if you've recently retired.  This sum IS taken into account for your annual taxable income.

So if you received  say £8k state pension and £6k personal pension per annum then £1500 of that is taxed.

Any interest up to £1k earned on savings is tax free. The rest is added to your annual income for taxation purposes so is eitherctaxed at 20 or 40% depending on ALL income.

Hope that helps.

 

Edited May 9, 2019 by Nanna
Typo error

[Nanna]

Sunshine Coast. Very nice but slightly more humid than the Gold Coast.  We intend heading to the Gold Coast or below.

Any suggestions welcome. 

We love living on or very very near to the coastline.  We walk, gym, cycle, kayak, love cafe culture,  love nature and WARMTH. 

We live here in a beautiful quaint coastline village but our kids are there and we do not relish the idea of English Winters any more!!

 

[Marisawright]

2 hours ago, Nanna said:

We've just arrived at that pension situation.  On private pensions you can release 25% tax free. Over and above that % is taxed according to your annual income.  First £12500 on annual income is tax free. Anything over that is 20% up to about £38k.  Above that it's taxed at 40%.

State pension now is £657 per month for a single person if you've recently retired.  This sum IS taken into account for your annual taxable income.

So if you received  say £8k state pension and £6k personal pension per annum then £1500 of that is taxed.

Any interest up to £1k earned on savings is tax free. The rest is added to your annual income for taxation purposes so is eitherctaxed at 20 or 40% depending on ALL income.

Hope that helps.

 

Is that taking into account both the UK tax and the Australian tax?

[Nanna]

No.  As a UK resident only so taxed under UK laws. 

I imagine if we were permanent residents in Australia we would  choose only be taxed there and their rules and thresholds are different.

[Marisawright]

10 hours ago, Nanna said:

No.  As a UK resident only so taxed under UK laws. 

I imagine if we were permanent residents in Australia we would  choose only be taxed there and their rules and thresholds are different.

You can’t choose. While you are living in Australia, you may or may not have to pay Australian tax depending on your visa. If you have income from the UK, you will remain liable to pay tax in the UK too, but under different rules because you’re a non resident.

[Nanna]

 the tax situation  is one that I hope Alan Collett can answer for us all.

[Nemesis]

14 hours ago, Nanna said:

 the tax situation  is one that I hope Alan Collett can answer for us all.

Tax isn't that simple when it includes income fro two countries, there is no "one size fits all" which is why everyone should get individual advice for their specific situation. I've had financial advice from Alan in the past and may well be contacting him again soon, but I would never expcet hm to be ale to give one answer that covers everyone  

[Marisawright]

15 hours ago, Nanna said:

 the tax situation  is one that I hope Alan Collett can answer for us all.

Well no, he can't answer it for us all, because there are so many variables.   It depends what kind of visa you're on, what your investments are in the UK, how much income you have, how long you've been absent from the UK.....the list goes on.

Alan is what they call in showbiz a "triple threat" - very few migration agents are also accountants, let alone an accountant with experience in both countries. So if you engage him, he's certainly better placed than most to give you clear advice on your particular situation.

But do be aware - you never, ever get to choose who you pay tax to.  It depends entirely on where you are legally resident.

[Nanna]

It seems the more inquisitive I am the more complicated it gets! But many thanks to everyone for their posts.