Just returned from visit decision time

[Gary H]

I have been lucky to be a UK and Australian citizen. Spent 9 years in Cairns, and a couple in SE QLD (GC) before that 15 years in SE Asia.

The last time I went Uk was 7 years ago, and well it messed with my head, reconnecting and feelings of familiarity. COVID happened, and life changed. We moved I started a business and well became somewhat settled. 

I have just spent a month back there, same feelings are stirred up. I miss my family terribly, they are dispersed all over the UK , Cyprus (parents), and Canada but accessible if in the UK as opposed to Aus.

Our flights to the UK cost a fortune compared to pre covid, The UK had changed, and there was a noticeable difference in the poverty gap. My old grounds (Thurrock) are now classed as some of the most economically deprived parts of the UK the council has gone bust, the roads in SE corner are well shocking, and the country is noticeably different post covid and Brexit. I won't talk about the need for everything requiring an app cost of living compared to Aus nor the health system but all a negative overall.

However some parts are thriving, and there is still a buzz to London that is unique, there is a lot I prefer about living there we had incredible weather (although I suspect we got lucky overall I don't mind the UK climate)

It is decision time I now know that I would have to live elsewhere in the UK than where  I had imagined, work what to do the wages are not comparable, there is a possibility I can transfer my business ( MH training) 

Glad we returned as expensive as it all was, plenty to think about, recognise now how Australian I have become, and the gloss of rose glasses is gone any decision we make will be with current experience in mind. 50 years young, no kids to worry about just a house to organise and sell/rent really, or make eth most of Aus and spend retirement time in Uk but  Q is will it be too late by then? Either way, we are lucky and thankful for the choices.

[Marisawright]

25 minutes ago, Gary H said:

50 years young, no kids to worry about just a house to organise and sell/rent really, or make eth most of Aus and spend retirement time in Uk but  Q is will it be too late by then? Either way, we are lucky and thankful for the choices.

If you're going to go, now's the time.  Planning to move to the UK when you retire is simply not practical, unless you're willing to wait until you're pushing 70 (or you are stinking rich).

I say that because of the Australian pension and superannuation rules. 

First, superannuation.   If you're old enough to take your superannuation as a lump sum before you leave Australia, it just becomes cash in the bank. No UK tax implications. But if you move to the UK early, and then want to take your lump sum, the UK taxman will grab a massive chunk of it.  So if you don't move now, you'll have to wait until you're over 60 (or possibly even older, if they change the legislation in the next few years) so you can claim your lump sum before you leave.  You could decide not to take the lump sum but convert it to a pension (income stream) instead, but that will still be taxed in the UK as normal income.  So your pension from your superannuation is going to be less than if you stayed in Oz, whatever you do.

Now the pension. As you know, the Australian pension is means-tested, so you may not be eligible for it in the early years of retirement if you've got a hefty superannuation balance.  However, superannuation is just a bucket of money, and you don't know how long it will last, so most of us like to know we've got the govt pension as a safety net.  

The bad news is that if you leave Australia before you're eligible for the govt pension, you can't claim it from the UK.  That means if you want that safety net, you'll have to stay in Australia till you're over the eligible age (currently 67, and may rise again in the next 17 years of course).  Once you've claimed it, you get to keep it even if you go overseas.

Depending on how long you worked in the UK, you may be able to get a part British pension instead, but you need to check your NI contributions. It would probably be worth making some back payments no matter what you plan to do.

Worth noting that if you retired to Cyprus, you would be able to claim your Australian pension from there.  

 

Edited September 2, 2023 by Marisawright

[Gary H]

All considerations, I am looking at NI and set ball rolling a while back have been told we would get an answer on contributions by the end of October.

 

[Marisawright]

19 minutes ago, Gary H said:

All considerations, I am looking at NI and set ball rolling a while back have been told we would get an answer on contributions by the end of October.

 

I would add that the advantage of moving at 50 is that you can get into the workforce in the UK and have a reasonable number of years to establish a private pension there.  Whereas if you stay in Australia, you're obliged to continue contributing to super even though you know it's not the best idea given you're planning to move.  

[InnerVoice]

@Gary H I think you and I are a lot alike. I used to visit the UK regularly in the late 90s / early noughties and loved my trips 'home', which were always during the height of summer when everything fun was going on. The downside was that they made me feel unsettled and I always felt homesick on my return to Australia. In 2008 I moved back to the UK for three years, but by 2011 I was back here once I realized life was better for me in Australia. I think if you decide to go back you will feel the same way, and my advice would be rent out your house in Australia (if you own one) until you've made your mind up.

Coincidentally we've been in Cairns for about a decade and we've also pondered a moved down to SEQ or northern NSW for retirement, but the property (in places that we'd like to live) is a bit out of our price range so we've got a plan to move to Portugal instead for a few years. Good luck with whatever you choose to do - the journey is nearly always more fun than the destination!

Edited September 2, 2023 by InnerVoice

[Parley]

Not sure how old you are. But from a financial perspective i would not want to be cashing in Superannuation at age 50.

50 to 60 is probably the peak year for compounding your balance. If you have anywhere near $500K in your early 50s you should easily have well over a million and probably more by the time you are 60.

[FirstWorldProblems]

4 hours ago, Parley said:

Not sure how old you are. But from a financial perspective i would not want to be cashing in Superannuation at age 50.

50 to 60 is probably the peak year for compounding your balance. If you have anywhere near $500K in your early 50s you should easily have well over a million and probably more by the time you are 60.

According to Google the avg annual return over the past 10 years for super is 7.5% so @Parley is right, $500k becomes $1m in 10 years without any extra deposits. 

[Marisawright]

8 hours ago, Parley said:

Not sure how old you are. But from a financial perspective i would not want to be cashing in Superannuation at age 50.

Where did anyone suggest that he should?  

[InnerVoice]

8 hours ago, Parley said:

If you have anywhere near $500K in your early 50s you should easily have well over a million and probably more by the time you are 60.

 

4 hours ago, FirstWorldProblems said:

According to Google the avg annual return over the past 10 years for super is 7.5% so @Parley is right, $500k becomes $1m in 10 years without any extra deposits. 

There's a reason why that always state, “Past performance is not a reliable indicator of future performance. Investments can go up and down.”

My pension and investments took an 8% hit in 2022 (in the end I was relieved it wasn't more) and two thirds of the way through 2023 are up only 3.5%. There's going to need to be a huge recovery in the world's economy in the next 8 years to make up for that. If I invested half a million at the start of 2022 I'd now have $476k. I'd need a return of 10% over the next 8 years to end up with a million. Good job my house has gone up!

Edited September 2, 2023 by InnerVoice

[Parley]

26 minutes ago, InnerVoice said:

 

There's a reason why that always state, “Past performance is not a reliable indicator of future performance. Investments can go up and down.”

My pension and investments took an 8% hit in 2022 (in the end I was relieved it wasn't more) and two thirds of the way through 2023 are up only 3.5%. There's going to need to be a huge recovery in the world's economy in the next 8 years to make up for that. If I invested half a million at the start of 2022 I'd now have $476k. I'd need a return of 10% over the next 8 years to end up with a million. Good job my house has gone up!

Normally it works on financial years. For year ended 30 June 2023 just gone i went up over 12%.

But i am not a set and forget investor. I do manage mine proactively.

[InnerVoice]

32 minutes ago, Parley said:

Normally it works on financial years. For year ended 30 June 2023 just gone i went up over 12%.

But i am not a set and forget investor. I do manage mine proactively.

You've done well there! I was working on calendar years rather than financial years, and mine went up 9% for the same period. Got any tips?

[Parley]

14 minutes ago, InnerVoice said:

You've done well there! I was working on calendar years rather than financial years, and mine went up 9% for the same period. Got any tips?

Depends how old you are.

[InnerVoice]

17 minutes ago, Parley said:

Depends how old you are.

Approaching 60.

[Parley]

17 minutes ago, InnerVoice said:

Approaching 60.

Educate yourself about super, don't just rely on an adviser if you have one.

Learn about TTR pensions (transition to retirement) which will be available for you when you turn 60. You might want to consider transitioning most of your accumulation account into a pension account. All earnings  are then tax free and you can receive a tax free pension.

If you want to keep working working after 60 you still can. Keep some amount in the accumulation account which is subject to 15% tax and will receive your normal contributions.

You can even reduce your working hours and probably be better off with the TTR pension.

If you are willing to invest a little money in your own education check out superguy.com.au $499 for heaps of training.

Taxable vs non taxable amounts in your super is another important consideration i think. At least it is for me. And strategies to convert it all to tax free over time.

[Marisawright]

1 hour ago, Parley said:

Educate yourself about super, don't just rely on an adviser if you have one.Learn about TTR pensions...

...but of course, if you're planning to live overseas, the TTR may not be the best option.

[InnerVoice]

1 hour ago, Parley said:

Educate yourself about super, don't just rely on an adviser if you have one.

Learn about TTR pensions (transition to retirement) which will be available for you when you turn 60. You might want to consider transitioning most of your accumulation account into a pension account. All earnings  are then tax free and you can receive a tax free pension.

If you want to keep working working after 60 you still can. Keep some amount in the accumulation account which is subject to 15% tax and will receive your normal contributions.

You can even reduce your working hours and probably be better off with the TTR pension.

If you are willing to invest a little money in your own education check out superguy.com.au $499 for heaps of training.

Taxable vs non taxable amounts in your super is another important consideration i think. At least it is for me. And strategies to convert it all to tax free over time.

I'm aware of how TTR works once you reach 60 but my earlier comment was in relation to your 12% ROI in the last financial year, which is a great return. What super fund are you in, if you don't mind me asking?

Over the last 10-15 years (since I started doing it properly) my pensions have averaged an ARR of 10%, which I'm very happy with. My financial advisor for my UK SIPP (where the majority of my investments are) once told me it's about "time in the markets, not timing the markets", and that has served me well. It's also a lot less stressful as you can forget about your investments on a day-to-day basis, and get on with enjoying your life. He assessed early on that I have a high appetite for risk so I've always been invested in the most aggressive funds, which are essentially 100% equities. I also have some EFTs with Vanguard, which again have done well over time - but not in the last 18 months. Interestingly, the last year was the first time I tried rebalancing my Vanguard portfolio (not my pension), and in hindsight I realized I would've just been better leaving it as it was. I know there's a lot of debate about which is best; passively or actively managed funds. From what I can see the performance of the latter is slightly better but you incur higher charges, so the end result is the same. The real winners are the fund managers, not the clients.

Edited September 3, 2023 by InnerVoice

[Parley]

1 hour ago, InnerVoice said:

I'm aware of how TTR works once you reach 60 but my earlier comment was in relation to your 12% ROI in the last financial year, which is a great return. What super fund are you in, if you don't mind me asking?

Over the last 10-15 years (since I started doing it properly) my pensions have averaged an ARR of 10%, which I'm very happy with. My financial advisor for my UK SIPP (where the majority of my investments are) once told me it's about "time in the markets, not timing the markets", and that has served me well. It's also a lot less stressful as you can forget about your investments on a day-to-day basis, and get on with enjoying your life. He assessed early on that I have a high appetite for risk so I've always been invested in the most aggressive funds, which are essentially 100% equities. I also have some EFTs with Vanguard, which again have done well over time - but not in the last 18 months. Interestingly, the last year was the first time I tried rebalancing my Vanguard portfolio (not my pension), and in hindsight I realized I would've just been better leaving it as it was. I know there's a lot of debate about which is best; passively or actively managed funds. From what I can see the performance of the latter is slightly better but you incur higher charges, so the end result is the same. The real winners are the fund managers, not the clients.

I don't want to hijack the thread so i might send you a PM later with what I do.

My main concern for the OP was cashing out his Super and going back to the UK and using the money for some other purpose like housing. Not that that isn't important but my point was between 50 and 60 is when your Super should really grow to a sizeable nest egg for retirement.

I don't agree with all this gung ho attitude of go now unless you are really sure. Doing that cost Marisa her lovely house in Sydney and resulted in now having to rent in retirement. Which is not a great thing to be faced with doing in your 70s.

[Marisawright]

29 minutes ago, Parley said:

My main concern for the OP was cashing out his Super and going back to the UK

No, he did not say that.  Apart from anything else, it's not possible to cash out your super at 50, as you well know.  I was explaining the ins and outs of taking a lump sum or income stream AFTER HE REACHES RETIREMENT AGE.

Also, who suggested he should be gung ho?   

29 minutes ago, Parley said:

I don't agree with all this gung ho attitude of go now unless you are really sure. Doing that cost Marisa her lovely house in Sydney and resulted in now having to rent in retirement. Which is not a great thing to be faced with doing in your 70s.

Actually I didn 't have a lovely house in Sydney. I had a little 2-bed townhouse in a complex which had ongoing concrete cancer/water penetration problems.  If the townhouse had been sound, we wouldn't have sold it, we would've kept it and rented it out for the long term even if we had settled in the UK.  

Also, of course, we were only overseas for a year.  Our flat in the UK plus our storage costs in Sydney cost us less than our rent in Sydney just before we moved, so we were not out of pocket except for the air fares and trips to Europe. Overall it ended up costing us less than if we'd stayed in Sydney and taken a three-month holiday.  And no, I'm not guessing, we kept track.

What cost us the money was that we'd sold up a few years before we actually made the move -- before I even joined this forum -- and then had to delay for family reasons.   House prices did take an unusually big jump during that year we were away, but it was the cumulative increase that made the difference.  Plus, of course, the fact that we could only afford the bottom end of the market (a unit/townhouse) even before we left Sydney. 

Edited September 3, 2023 by Marisawright

[InnerVoice]

39 minutes ago, Parley said:

I don't want to hijack the thread so i might send you a PM later with what I do.

Thanks, that would be appreciated.

[can1983]

On 02/09/2023 at 15:00, Gary H said:

I have been lucky to be a UK and Australian citizen. Spent 9 years in Cairns, and a couple in SE QLD (GC) before that 15 years in SE Asia.

The last time I went Uk was 7 years ago, and well it messed with my head, reconnecting and feelings of familiarity. COVID happened, and life changed. We moved I started a business and well became somewhat settled. 

I have just spent a month back there, same feelings are stirred up. I miss my family terribly, they are dispersed all over the UK , Cyprus (parents), and Canada but accessible if in the UK as opposed to Aus.

Our flights to the UK cost a fortune compared to pre covid, The UK had changed, and there was a noticeable difference in the poverty gap. My old grounds (Thurrock) are now classed as some of the most economically deprived parts of the UK the council has gone bust, the roads in SE corner are well shocking, and the country is noticeably different post covid and Brexit. I won't talk about the need for everything requiring an app cost of living compared to Aus nor the health system but all a negative overall.

However some parts are thriving, and there is still a buzz to London that is unique, there is a lot I prefer about living there we had incredible weather (although I suspect we got lucky overall I don't mind the UK climate)

It is decision time I now know that I would have to live elsewhere in the UK than where  I had imagined, work what to do the wages are not comparable, there is a possibility I can transfer my business ( MH training) 

Glad we returned as expensive as it all was, plenty to think about, recognise now how Australian I have become, and the gloss of rose glasses is gone any decision we make will be with current experience in mind. 50 years young, no kids to worry about just a house to organise and sell/rent really, or make eth most of Aus and spend retirement time in Uk but  Q is will it be too late by then? Either way, we are lucky and thankful for the choices.

Guess everyone's position is different. The only way I would ever move back to the UK is if most of my children went to live there but even then id say it would be very unlikely. At the moment 90% of my family is here and I consider Australia a better country so very little to gain moving.

But it sounds like your circumstances are quite different....

[Gary H]

Always focused on super, there are other ways to secure income in the future.

Income streams have been a focus for us since our early 30s, super is just one of them but frankly not one of any merit.

I have always disliked being told that we must give money over to a super fund and to be given conditions on how, where and when it's accessed, I understand the advantages for some but for us who tend to bounce about, there are better options.

 

Edited November 11, 2023 by Gary H

[Marisawright]

45 minutes ago, Gary H said:

Always focused on super, there are other ways to secure income in the future.

..., I understand the advantages for some but for us who tend to bounce about, there are better options.

 

I agree.  Because of the tax advantages, superannuation is the obvious choice for most Aussies.  However for anyone who feels there's even a slight chance they might return to their home country in the future, it's the last thing you should be investing in IMO, due to its lack of flexibility.

Edited November 11, 2023 by Marisawright