Russell Ward Finance Writer
Baby boomers are increasingly choosing to take a ‘golden gap year’ as they approach retirement, or even once in retirement, to exploit their growing free time, seek reward for their years of hard work, and embrace a passion for travel, volunteering and other inspiring experiences.
The key to a successful golden gap year is to get your finances into good shape before you go. To help you prepare for the trip of a lifetime and consider the monetary impact of taking time out to explore, consider these four financial takeaways for planning your golden gap year abroad.
1. Know your tax implications
Due to the length and nature of gap years, most 50-to-60 year olds may choose to work part-time while away, plus they might also rent out their home to finance the year. There are tax implications associated with this so it’s important to know where you stand. You may gain advantage from declaring yourself a non-resident for income tax purposes, but earning overseas income could also require you to pay tax in your new country of residence. It’s a good idea to research the double taxation agreements to ensure you aren’t paying tax both there and at home.
2. Check your Centrelink benefits
Whether you choose to teach, study, volunteer or simply sit back and soak up your new environment, seek the help of a financial adviser to better understand how your Centrelink benefits might be affected by this longer stay abroad. It will often vary by individual circumstances but you should know that there could be an impact. Professional advice will help you prepare for this and for any other related issues.
3. Plan for unexpected occurences
As you’ll be away for a decent amount of time, anything can and might happen during that time, both at home and away. Ensure your travel insurance covers the places you plan to visit and the activities you want to do. Also, check your life insurance is in place – and, of course, find out from the insurer if the policy still applies when living abroad. Set up power of attorney for your assets while away and ensure your will is up-to-date and accurate. Taking control of these aspects of your finances will give you greater peace of mind while enjoying all that a golden gap year has to offer.
4. Don't forget your super
While golden gap years don’t necessarily mean completely leaving the workforce, they could offer a way of transitioning to a more flexible working arrangement. What’s important to remember is that you can still contribute to your superannuation while away overseas and registered as a non-resident of Australia. Should your retirement kick in while you are on the golden gap year, the same release restrictions will apply to your super benefits as if you were based at home.
To talk to us about how we can support your savings and financial goals in preparation for your golden gap year, please visit one of our branches, check out our savings products or give us a call on 132 888.
About the author
Russell Ward is a professional business writer who has been published in The Huffington Post, The Telegraph, CEO Magazine, Global Living, Mamamia and Thought Catalog.
Please note that this article is not financial product advice and does not take into account any person’s individual objectives, financial circumstances or needs.