Singaporeans retiring in Thailand, Indonesia, and other developing countries may face these serious unforeseen issues.
Many Singaporeans dream of retiring abroad, often to somewhere they deem “cheaper”. As the theory goes, the strong Singapore dollar should last you twice as long if you move to Indonesia or Thailand, so it’s like a long paid vacation.
However, just as many Singaporeans move overseas during early retirement, only to rush back a decade later. They do so largely due to economic and political issues they did not consider. So if you're thinking of retiring abroad, be aware that you may face these potential problems and factor them into your retirement plans.
You Lose Access to the Best Social Welfare
For obvious reasons, social welfare has to be catered primarily to citizens living in Singapore. This comes in the form of public transport concessions, healthcare subsidies, and even retail discounts (e.g. senior citizens’ tickets). These are all meant to improve living standards and lower costs for retirees.
If you’re not in Singapore however, you won’t be able to access any of these benefits. This may not be a problem if you are living in a cheaper country, where costs are also lower; but if you live in places such as the United States, United Kingdom, or Australia, you will have to bear the full costs of these services on your pension.
The Cost of Living May Not Be as Low as You Imagine
It may seem to you that, in various developing countries, the cost of living is lower. However, bear in mind that developing countries tend to have double digit inflation.
Because products and services are so much cheaper in developing countries, companies prefer to have things made there (this is why many companies make things in India, China, or Morocco, rather than in Singapore or America). Developing countries are thus prone to experiencing explosive growth, as businesses move in and the wealth of their citizens rises dramatically. The same thing happened to Singapore between the 1960s and 1970s, when many Singaporeans started to become rich very quickly.
Because of the money flowing into developing countries, the cost of goods and services will increase. In a decade from now, the cost of living may be just as high as Singapore - or at least more expensive than your pension fund can handle.
Never assume that a country with a lower cost of living will remain affordable.
You May Have Difficulties Moving Around
Singapore’s small size is both a drawback, and an advantage. The upside is that all parts of this island are well connected; wherever it is you need to go, it’s probably just a short distance from a train station or bus stop. Likewise, taxis and private hire cars are available most times of the day. This is a huge convenience to elderly retirees.
If you move to a developing country however, you may not get the same level of public transport (barring major metropolitan areas). The same goes for moving to more rural places. “Country” areas in Australia, Thailand, Indonesia, etc. are less well connected, and transport to the city may only be available once or twice a day.
Consider how this will affect you, particularly if you have health or mobility issues. Many retirees in rural areas return to Singapore in their 80s and 90s, primarily because it’s hard to get around.
Corruption Can Make Life Harder and More Expensive
We don’t want to point any fingers, but some countries are high on the corruption index. Everything from traffic fines to buying land might require bribery, and don’t forget the banking system.
If you are going to deposit your pension fund abroad, you need to be wary of who gets to handle it. Not all countries have well-regulated financial sectors, and you may be putting your retirement fund into the hands of someone shady.
Corruption brings risk, especially in the handling of your wealth and taxes.
Currency Conversion Can Be a Headache
If you are just going on holiday, you may be disappointed when the Singapore dollar falls unexpectedly. This makes things more expensive, and you may lose a bit of money. But if you are constantly converting large amounts of currency, the loss can be staggering.
You can overcome this with a Forex broker, or by setting up multi-currency accounts. But these can only mitigate, not replace, the money lost through foreign exchange. It’s highly advisable that you set up a low-cost conversion process before you move from Singapore.
Governments Generally Favour Citizens Over Foreigners
Governments can and do change regulations very suddenly. An anti-immigration government might insist that you return to Singapore, cancelling your visa on short notice. They might also change the rules regarding land ownership, forcing you to sell your place abroad on short notice (or only to other citizens).
This means you have to make contingency plans, in the off chance you need to come back home. Don’t completely remove all your assets from Singapore, and leave it all abroad.
Imported Food Will Cost More
If you want to retire abroad, you’d better learn to live like a local there. This includes broadening your palette, to eat as the locals eat.
Even in Singapore, you can see how the cost of imported foods (in higher end supermarkets like Tierney’s and Jason’s) is much higher. Expatriates who don’t adapt to local tastes, and rely mainly on imported groceries, pay through the nose for it.
The same will happen to you if you live abroad. Remember that, when people say the cost of living is low, they typically assume you are buying and eating local!