Diary of a self-funded retiree: Entry 8

Welcome to the eighth update in my retirement journey diary, where I'm sharing how my wife and I are planning for the transition into retirement. Here's what I've covered in my previous entries:  

Entry 1: How we've simplified our financial lives  

Entry 2: Our investment strategy and asset allocation both now and in retirement  

Entry 3: Our retirement budget, including how we plan to adjust our spending if markets shift  

Entry 4: Downsizing, aged care, and how much to give the kids (and their kids)  

Entry 5: How we plan to stay healthy and keep our minds active in retirement  

Entry 6: What it takes to run our SMSF 

Entry 7: How we're managing risk in retirement and making sure we don't run out of money 

Diary entry 8: Can we spend part of our retirement living overseas and what do we need to think about? 

My wife, Jane, and I have been thinking about spending more than six months living in a house she shares with her brother and sister in Spain. Some friends have just come back from 12 months in France and loved it, but they said you need to prepare.  

In this diary entry, I take a closer look at some of the issues we need to consider. How would this affect our super fund? What should we do about health insurance? And what do we do with our house in Australia while we are overseas? 

Why would we consider living in Europe for an extended period? 

We both have relatives who live in Europe - the UK, Spain and France - and many friends who have retired across the region. My wife also has a share in a house in Majorca, though we may go elsewhere for three months or so. 

Would we leave Australia permanently? Probably not - our children are married and live here, and we have our first grandchild, who turned one in December. 

However, we'll probably spend six months or more in Europe either next year or the year after, and that stay may stretch longer depending on circumstances. We think that living in a rural community in Europe will be a stimulating change - learning a language, experiencing a different culture, etc. 

So, how easy is it to live in Spain for many months? 

When I asked ChatGPT, it came up with the following things to consider: 

• Can we get a visa to stay longer than 90 days in the Schengen area? 

• Can we find somewhere to rent for less than six months? 

• How expensive is it to live there, for petrol, heating, etc? 

• Can we get health insurance cover? 

• Do we need a Spanish bank account or can we use multicurrency debit cards? 

• What about our tax situation? Are we liable for Spanish tax? 

Getting a visa is easy, no? 

We can stay for 90 days out of a rolling 180 days anywhere in the Schengen area (all of the EU plus Switzerland, but not Ireland or Greenland). In the past, having two passports was a useful way to get around the 90-day limitation. With Europe's new electronic travel system (ETIAS), that workaround no longer applies, so staying longer now means applying for a visa. 

To do that, we'll need a non-lucrative visa (NLV), which means applying through the Spanish embassy and proving that we have enough money to look after ourselves (€2,400 a month) and valid health insurance for Spain. Not hard, but it will take some time and cost about €400. 

Where would we live? 

We're still looking at the options. We have travelled to Majorca for many years but haven't seen much of the rest of Spain. I think somewhere near the French border and the Pyrenees, but Jane is not sure. We both agree we want an airport within 2-3 hours' drive. We think a small town or village will make it easier to find a reasonably priced long-term rental, though we haven't started looking yet. 

We are still relatively healthy and mobile, so small towns where you can walk to shops and cafes would suit us. If we needed care services, bigger cities would be better. The downside to small villages is that not many people speak English, so everything will be done in Spanish - but that is part of the challenge (and good for our brains!). 

Can we afford it? 

During COVID we rented our house out while we went to the UK to look after my mother who was ill. We were among the lucky ones, as I had a flexible employer so we could go for at least three months - we have friends who couldn't visit their elderly relatives during that period! 

The rent we received was taxable but did provide additional income and would be more than enough to cover the rent on a small place in rural Spain - certainly not enough for a house or apartment in London or Paris. Having sorted out where to lock up our things once, we think it will be relatively easy to do again. We still need someone to check the pool and tidy the garden every month, but we have that sorted now. 

Our friends rented a three-bedroom house near Toulouse in south-west France for less than €30,000 a year - far less than what they received for renting out their house in Sydney. 

We'll need a car, and the cheapest option for a 6-month period seems to be a flexible lease at about 50% of the cost of a long-term rental. 

How about health insurance? 

I checked with our health insurer in Australia and we aren't covered if we get ill or need medical care while in Spain. Australia has Reciprocal Health Care Agreements with some countries (the UK and New Zealand, for example), but not Spain or France. 

To stay longer than 90 days, we'll need comprehensive private health insurance that meets visa rules, and Spain is quite particular about the type of cover and provider. In practice, this usually means having a policy that is valid for 12 months. 

My wife has Type 1 diabetes but manages it well and has never needed emergency treatment. From what I can see, international health cover becomes more expensive as you get older - as you would expect - with costs rising sharply around age 70. It may not cover pre-existing conditions, and it is much cheaper if we avoid the US. 

Based on an initial look at a couple of websites, we would be looking at around €200 to €300 a month for cover in Spain. 

What about money? 

The great benefit of Europe is the single currency - the euro is used across much of the Schengen area, so there's no faffing about changing currency at borders or ending up with lots of coins in different currencies. Another advantage is that there are usually no credit or debit card surcharges, so using a Revolut, Monzo or Wise debit card with euros already on it can save on foreign exchange fees and other charges. 

We might need a Spanish bank account if we were paying rent monthly, but we think we can negotiate to pay in advance to avoid the hassle of setting one up and make just one foreign exchange transfer. Our Revolut account will be able to pay from most regular costs. 

And lastly, tax 

This is one that a lot of friends remind us about. If you stay too long in any country, you can become a "tax resident" and be subject to taxes such as inheritance tax, which doesn't happen in Australia. As a rule of thumb, staying more than six months puts you in the danger zone. 

Spain would tax us on our worldwide income if we were considered tax residents, including any rent we receive on our house in Sydney. They may also impose a wealth tax of up to 2.5% on our worldwide assets. 

We should be able to offset tax already paid on income and dividends, but only if we spend more than 183 days in a calendar year in Spain. For example, if we arrived in September and left in May, we would spend fewer than 183 days in any calendar year and should avoid becoming tax residents. 

My top tips 

• Plan ahead for visas. Each country has different rules, but it's usually possible to get one. 

• Choose the experience, not just the place. Consider somewhere that will give you a different lifestyle - a small country town can be more rewarding than a big city. 

• Make sure you have enough to do - walking, cycling or swimming. There's no point going abroad just to sit online. 

• Check everyday costs. Electricity and petrol are much more expensive in Europe and can add up quickly. 

• Sort out your insurance and money before you go. Having this organised in advance saves stress later. 

• Watch your timing for tax. It generally only becomes an issue if you stay longer than six months but it's worth getting specialist advice. 

• Use online tools such as ChatGPT or Gemini. They can help with early research. 

What's next? 

In my next column, I'll share an update on how our investments are doing and look at what's involved in getting a UK pension. 

You can read entry 7 here. Diary entry 8 will be published on 5 March 2026.