Should you follow your family overseas when they emigrate?
*This content is brought to you by Sable International
Global mobility is a modern phenomenon. It allows people to experience international opportunities and cultural diversity and realise their dreams. But it also rips families apart, often leaving the older generation lonely and without purpose.
A common question facing South Africans is if your child gets an opportunity abroad, or wants to move country for another reason, and takes your grandchildren with them, should you follow them? Sable International is a group that specialises in all aspects of emigration, from visas and citizenship to global education, tax and retirement planning. As such we get this question a lot.
While every case is different, here are some of the factors to consider.
1. Do you have the right to move to the country where your family has moved?
This is an important starting point. Some countries make family allowances, which makes it easier. Australia, for example, allows parents who have a majority of children in Australia to move there (with various provisos and costs).
The UK, on the other hand, does not have such a system. However, Sable International's immigration specialists can sometimes find ways for older South Africans to qualify for British passports. Applying for a UK Ancestry visa remains an option even for senior citizens if they have a British grandparent and are willing to work at least part-time (even if for a local charity).
Countries like Mauritius and Portugal have low financial thresholds for retirement visas, and there are various schemes that allow for citizenship-by-investment. This allows individuals to gain citizenship in a foreign country by making a qualifying financial investment. Citizenship- or residency-by-investment programmes also offer enhanced visa-free travel which is useful for visiting children who may be scattered around the world.
2. Do you have enough funds?
Sable International's wealth team has the experience to assist you with a realistic budget in the common emigration destinations for South African families. This does depend on your circumstances and attitude to short-term investment market risk. Some people's basic budget is quite luxurious for others.
In general, you can expect to have a significantly smaller home as South African residential property is extraordinarily cheap (except in some premium areas in Cape Town). Entertainment is normally more expensive, but other things are similar, and insurance and security costs are usually lower. The availability of public medical care can also be a significant benefit.
Against the context of vastly differing tastes and means, a home in Portugal or in Mauritius would cost you EUR/USD 350,000 – 500,000. It would likely be double that in the South East of England, and triple in Switzerland. Once the cost of a home is catered for, the cost of living can be analysed.
Sable International has a team of cross-border specialists who can work closely with you to understand the budgeting and cashflow position that you would face when moving to a new country.
So, whether you are looking to play a round of golf or spend time with the grandkids, a robust financial plan is an important step in getting you there. We have advisers and specialists who live and work in key countries like SA, UK, Portugal and Mauritius and who can provide a realistic picture of what to expect.
3. What are the tax implications?
Many retired people feel like their main tax-paying days are behind them, but it is essential to speak to a cross-border specialist. Important factors will be Capital Gains Tax (including exit taxes in South Africa and ensuring this is not doubled up in the destination jurisdiction) as well as lump sum taxes on the withdrawal of funds from pension products. Any family with a trust needs specific advice.
4. How does medical care compare?
The South African private healthcare system is still good. Younger generations have valid concerns about what National Health Insurance (NHI) will look like when they are old, but this is unlikely to affect people already in their 70s.
Several countries offer public healthcare. Private medical care is available in most places but can be costly. Some medical insurers use age-rated premiums which means that it gets very expensive when you get older. Insurers in some jurisdictions like Mauritius have in the past not taken any new customers over the age of 60 so immigrants need to have an international medical plan in place that will be portable before moving.
Carefully consider what care will be available and make detailed enquiries. If you have a team of specialists looking after you after a major health issue, this is going to be difficult to replicate. Are your children able to look after you when you get frail? Bear in mind that caring can be expensive in some jurisdictions.
5. What happens if your children move again?
What a frustration this would be. If your child is an ambitious, globally mobile executive, be pre-warned. On the other hand, if the move is more personal than career-related, it should be more permanent. Either way, there are no guarantees. They are also moving into the unknown and will need to prioritise their own needs and those of their immediate family.
6. How easy would it be to move back?
This must be considered, and in the first few years, it may be worth keeping that option open. It would be a good idea to keep your name on the list of retirement villages, keep medical and life insurance intact, and don't hurry to close bank accounts. Make an effort to keep in contact with friends and don't alienate yourselves from those who could not afford the move.
7. Will you be able to build new social circles?
You will need to have your own life and be willing to build new social circles. Keep in mind that people may be friendly and welcoming but are likely to be busy with existing social lives. You would need to consider joining clubs, doing volunteer charity work and getting involved in the community to help you meet people and feel at home.
8. Have you thought about your will?
Sadly, we all need to prepare for the inevitable. Your South African will won't be adequate. Estate planning factors will be different, and inheritance tax/estate duty can be quite high. Advice in your home country is highly unlikely to be comprehensive and this is an area where cross-border skills are critical.
Following your children overseas is likely to come with many challenges and adjustments. But a move to a different country can be an amazing life-enriching opportunity. If you are in good health and prepare carefully, you could build a whole new trove of family memories.
Sable International's team of advisers can help you with offshore investment advisory services, wealth planning, insurance advice, mortgages and pensions as well as retirement advice. Get in touch by calling +27 (0) 21 657 1540 or emailing wealth@sableinternational.com.
Read also: