Home to both lively landscapes and a highly diverse and fascinating
culture, South Africa stands out as a place of opportunity for many potential retirees. Bask in a glowing sun
while out on the golf course or relax in the shade on a beach. If you are a
foodie or oenophile, you can enjoy this country’s culinary treats and excellent
wines. Between all the things to do and see, this southernmost African nation,
where English is widely spoken, can sound like a dream. So, if you’re
considering how to retire in South Africa here are a few areas to look into
first. A financial advisor can help you
determine if your U.S.-based assets will cover expenses in the Rainbow Nation.
Cost of Living and Housing
A common draw for U.S. expats when selecting a country to settle down in
is a low cost of living, and South Africa tends to suit that criteria.
Generally, its cost of living is 41.77% lower than that in the U.S., with rent
60.88% lower on average as well.
According to Numbeo, one of the
largest cost-of-living databases, these averages stay relatively consistent
across the country’s most important cities. Whether you examine one of its
three capital cities, Pretoria, Bloemfontein and Cape Town, or its most
populated urban location, Johannesburg, both the average cost of living and
rent remain low.
For example, Johannesburg’s cost to rent a one-bedroom apartment in a
city center averages around $470.22, and the price to purchase an apartment, by
foot, in the same location is $92.53. According to World
Population Review, Johannesburg’s 2021 population sits around
5,926,668. A comparable city is the U.S.’s New York City with 8,622,357. The
cost of living in comparison to New York is less than half at 54.59%. For
example, the average single bedroom in New York
City is $3,269.65 for rent and $1,515.09 per square foot to purchase.
So, if your ideal retirement location has lower-cost housing, regardless
of whether you want to rent or buy property, South Africa may be a suitable
location.
Retire in South Africa – Visas and Residence Permit
While South African does have a visa
that foreign nationals can apply for in the hopes of retiring there, there is
no set age range for such a visa. Anyone of any age can apply for the retired
persons’ visa as long as they meet other requirements.
It’s important to note that none of these rules concern working in South
Africa. Generally, to retire in a foreign country and obtain a retirement visa,
work is barred from the applicant. They have to have a sustainable pension to
support them instead. However, while you still must prove a set amount of
assets or funds, you are free to work.
Retirees tend to take two routes when retiring in South Africa: a
retired permit or an independent financial person permit. The main difference
between the two is that the retired permit allows for a temporary residency
basis. A retired visa for a temporary residence is valid for up to four years
and asks for a minimum income per month or year to be proven. Similarly, a
retired permit application for permanent status asks for an increased minimum
monthly income. Still, it lasts forever as long as the holder visits South
Africa once every three years.
Lastly, the independent permit requires a minimum net worth of about
$800,000 at time of writing and fee of about $8,000 at time of writing, but it
has the same lifespan as the retired permit.
Retire in South Africa – Healthcare
The majority of South Africa’s hospitals are public, which tend to be
overcrowded and under-resourced. They often have issues you would expect from
an overburdened staff, including a need for updated equipment.
Expats are more likely to find excellent healthcare through the
country’s private hospitals and practitioners, which can mostly be found in
major urban areas. There, you’ll find several well-established, nationwide
hospital chains that offer a high standard of care. You also won’t run into the
issue of non-English speaking staff at these hospitals. However, their services
are expensive. While South Africa’s Bill of Rights demands healthcare for all,
it is based on a sliding scale. Typically, expats are put into a category that
forces them to pay for healthcare out of pocket, so it’s a better idea to have
private health insurance.
Retire in South Africa – Taxes
South Africa experiences extreme income
inequality. The Gini coefficient,
the standard index to measure inequality, of the country is 0.58 – one of, if
not the, highest among any nation. South Africa, as a result of this and
historical instability, is only just beginning to recover. However, because of
this wealth disparity, personal income tax
and most forms of revenue are only collected from a small percentage of the
population.
South Africa’s personal income tax rates for residents are progressive
and range from 18% to 45%, depending on your income bracket. Non-residents are
only subject to taxes on income made from South African sources. The country
defines a resident as someone present in the country for more than 91 days
during the current and preceding five years.
It’s important to keep in mind that the U.S. requires all of its
citizens to file taxes regardless of
where they currently are in the world.
Retire in South Africa – Safety
The U.S. Department of State
warns its citizens that South Africa is a location that experiences crime and
civil unrest.
On a lower level, some crimes, such as scams, also call for caution.
It’s essential to be careful with your money, where you walk (especially at
night) and keep your wits about you when interacting with things such as ATMs.
Some are tampered with to obtain your cards and information.
The Takeaway
South Africa offers many potential benefits to the average retiree. It’s
a naturally beautiful country that hosts a number of exciting sights and events
to keep anyone entertained. Not only that, it’s a low-cost option in comparison
to many countries and doesn’t put as many regulations in place for its retired
foreign-born residents. There are legitimate safety concerns for the average
tourist and a healthcare system that needs fine-tuning. Depending on your
preferences for your retirement, the benefits may outweigh the difficulties or
vice versa.
Tips for Achieving Your Retirement Goals
- Finding the right financial
advisor who can help you towards your goals shouldn’t be hard.
SmartAsset’pairs you with financial advisors in your area in as little as
five minutes. If you’re ready to be matched with your local advisor,
- Retiring can come with all sorts of unexpected
costs and obstacles. This is true even when you’re looking at a low cost
of living country like South Africa.
www.samigration.com