Retiring Abroad as an Australian

They have been talking about a year in Spain, perhaps longer.

By Neil Solomon · 4 min read

Picture a couple named Alasdair and Rhiannon, 69 and 67, who live in Brisbane. They have been talking about a year in Spain, perhaps longer. Their son Rory-James lives in Perth and has said he will visit twice.

Alasdair has lived in Australia all his life. Rhiannon came from Wales at 42, so she has 25 years of Australian residence between age 16 and Age Pension age. They are both on the Age Pension. They had heard two things at the bowls club. One was that the pension can be paid abroad. The other was that Alasdair could cash out his superannuation on the way out.

The first is true. The Department of Social Services guide says the Age Pension has "unlimited portability", meaning it can be paid overseas for as long as a person stays qualified. Then they found the second part.

The formula is the usual rate times (months of residence plus one) divided by 420, which is 35 years. The Department of Social Services guide describes it; it applies after 26 weeks outside Australia.

"Twenty-five out of thirty-five," Rhiannon said. "So mine could fall to about seventy-two percent of the full amount."

"And mine stays full," said Alasdair, "because I have the 35 years."

"If I come home, it goes back up."

It does. The guide says the rate can rise again on a return, and the departure date comes from immigration records. A few older cases are worked out on a 25-year basis instead, so Rhiannon's own record is a question for Services Australia. We could not read the Services Australia pages directly, and its page on this is dated March 2022, so the live page is the one to check.

The superannuation news was shorter. The Departing Australia Superannuation Payment is for people on temporary visas. Australian citizens and permanent residents are not eligible. Alasdair's money stays in the fund. The tax office says that for people aged 60 or older, a lump sum from the tax-free part is not taxed, and income streams from the taxed part carry no tax. Whether Spain taxes what arrives is a separate question under Spain's rules; ask the Spanish tax office, or a paid professional.

Last was health. The couple had assumed Medicare's reciprocal agreements would cover them. Australia has agreements with 11 countries: Belgium, Finland, Ireland, Italy, Malta, the Netherlands, New Zealand, Norway, Slovenia, Sweden and the United Kingdom. Spain and Portugal are not among them. The agreements describe care for visitors, and Services Australia is reported to advise travel insurance as well. We could not confirm Medicare eligibility after a permanent move, because that page was blocked. An American may see a parallel in the US Medicare program, which mostly does not cover care abroad.