In many ways, Australia is a near-perfect retirement destination for Americans. It has endless beaches and a balmy climate. It’s renowned for its laid-back, “no worries” vibe. The population is English-speaking, beer-loving and welcoming to immigrants. And its cities are sophisticated, efficiently run and safe. In fact, no fewer than four have made the Top 10 list of the world’s “Most Livable Cities” for four straight years. (See Find the Top Retirement Cities in Australia.)
Plus, Australia is home to the koala and the kangaroo, the wallaby and the wombat.
What’s not to love about Australia? Lately, its high cost of living, especially the cost of housing. But that could change, and, in fact, it is changing right now. If you’re hoping to retire with $200,000 in savings augmented by some Social Security or pension income, keep an eye on Australia.
Trends to Watch
After years of being an inexplicably cheap place to live, costs in much of Australia soared in recent years, then began falling back to Earth after the financial crisis in 2008. Recently, the strength of the U.S. dollar has helped to further depress prices, at least for Americans. Overall, costs in the major Australian cities dropped in 2016, in some cases steeply, according to the Mercer Cost of Living Rankings. (The Mercer survey is pertinent to Americans because it was developed as a guide to living costs for corporations doing business abroad. For instance, it helps them adjust salaries for expat employees, so the base for comparison is New York City, and costs are calculated in U.S. dollar buying power.)
Another factor that may affect housing prices is the departure of many Australian retirees for cheaper shores – especially in Southeast Asia. Indonesia, Malaysia and Vietnam are among their choices because living costs there are about a quarter of Australia’s. (See Retire in Vietnam with $200,000 in Savings?)
Estimating your Cost of Living
So what would it cost to retire in Australia? The cost-of-living site Numbeo provides a breakdown of consumer prices, including real estate costs, in Australia’s cities and towns. While Sydney and Melbourne are no bargains these days, they’re not much more expensive than New York or San Francisco. Adelaide and Perth offer their own attractions on a smaller scale. According to Numbeo’s cost of living estimator, monthly living expenses, including rental of a one-bedroom apartment in one of these city centers, range from $962 to $1,847.
Some basic math shows that if you need even $2,000 per month to live, your $200,000 savings wouldn’t last a decade ($200,000 ÷ $2,000 = 100 months, or 8.3 years); at $2,700, your savings would be gone in about six years.
This is just a back-of-the-envelope example, of course. It doesn’t include tax or medical expenses or vacation travel. Add in a sports club membership or eat out every night and your costs will be higher. And it assumes your monthly expenses stay exactly the same, that your retirement savings don’t grow and that you won't have any other source of income.
Add in Social Security
Most Americans get Social Security payments – averaging $1,341 a month ($2,212 for a couple) – which would cover a good chunk of your monthly expenses (figures as of January 2016). This would stretch your savings further. Ditto if you find a place out of a city center or share the apartment. And it all depends where you’re coming from, too: Australian cities begin to look like a savvy cost-saving strategy compared to living in New York City or San Francisco (where Numbeo estimates your monthly expenses would be closer to $8,000/month).
Forget Crocodile Dundee
If you’re considering retiring in Australia, forget the Crocodile Dundee clichés. The vast majority of Australians live in cities that are cosmopolitan and highly diverse. The whole continent is home to fewer than 24 million people, most of them residing in cities on and near the coastline that rings a forbidding interior. Not the least of Australia’s attractions is an excellent national healthcare system. (However, newcomers are not eligible for coverage unless they achieve permanent residency status, and they must obtain private health insurance while residing in the country on a visa.)
Australia was established by Great Britain as a penal colony in 1788. Free settlers, sheep farmers, gold miners and assorted adventurers soon followed. During its colonial years and after achieving independence, Australia retained Britain’s language and government system, and many of its customs. The country is a member nation of the Commonwealth.
The new settlers pushed aside the indigenous population, known as Aboriginal Australians, who had made the continent their home for at least 40,000 years. Their unique culture and their rights have received more respect in modern times. The government officially apologized for its treatment of the aboriginal people in 2008.
Speaking of unique culture, the Australians have embellished the English language to suit themselves, and a few words here and there might need translation. If you don’t want to make a galah (a fool) of yourself in Oz (Australia), check this slang list before you go.
Distance from family, friends – even vacation spots
If you’re counting on face time with family and friends from home, Australia may not be the retirement spot for you. Wherever in the world you’re from, Australia is very, very far away from there.
A flight from New York to Sydney takes at least 22 hours with one stop, and most have at least two stops. Melbourne is 23 hours minimum.
Southeast Asia is a popular vacation destination for Australians because of its relative proximity to Australia, but even those nearest “neighbors” aren’t close. A flight from Melbourne to Jakarta, Indonesia, takes a good seven hours – if you can get a nonstop. Ho Chi Minh City, Vietnam, is 12 hours minimum.
A flight to New Zealand, which many think of as an island off Australia, takes more than three hours. Auckland, New Zealand is 1,630 miles from Melbourne.
Australia has a wide variety of visas. Like many countries nowadays, fast-track permanent residency programs require a high net worth. Immigrants who lack assets high enough to qualify apply for a visitor visa, and renew it as needed. Permanent residency requires more paperwork, and at least four years in the country on a guest visa.
The Bottom Line
No one knows how long they’ll live, of course, so it’s impossible to predict with certainty how long $200,000 in savings will last. Certainly there are places where $200,000 will stretch further than in Australia. (See Retire in the Philippines with $200,000 In Savings? for instance.) But with costs trending downward there, it’s worth keeping an eye on the possibilities, especially in smaller cities.
If you don’t mind relying on video calls, email and social media to stay in touch with family and friends back home, you will be able to take your pick of four of the world’s “most livable cities.” To start your research, check out Life in Australia, the Australian government’s handbook for new arrivals. And find out about the experiences of current expats in Australia at the ExpatForum.com for Australia.