Posted on: 8th July 2025

Retirement Planning Strategies for Expats in South Africa

Thinking about retiring in South Africa ? You’re not alone. With its warm climate, relaxed lifestyle, and affordable cost of living, it’s easy to see why so many expats choose to spend their golden years here.

But while the sunsets may be easy, retirement planning as an expat requires careful thought. Tax rules, pensions, healthcare, and visa requirements can be complex.

In this article, we break it all down to help you plan a secure and enjoyable retirement in South Africa.

Understanding Tax Residency

South Africa operates on a residency-based tax system, which means that residents are taxed on their worldwide income, while non-residents are taxed only on income earned within South Africa.

This distinction matters a lot for expats. If you’re considered a South African tax resident, your foreign pension income might be taxable locally—unless a double taxation agreement (DTA) between South Africa and your home country prevents it. If you're a non-resident, foreign income is generally not taxed in South Africa.

Changing your tax status involves more than just moving abroad—it often requires formal financial emigration and notification to the South African Revenue Service (SARS). Always consult a tax adviser who understands cross-border issues.

Managing Foreign Pensions

Many expats come to South Africa with pensions from the UK , Europe, or further afield. It’s important to know your options when managing these funds.

You may be able to transfer your pension into a recognised offshore vehicle such as a QROPS (Qualifying Recognised Overseas Pension Scheme). This can offer tax advantages and greater flexibility.

Also, be mindful of currency exchange risks. The South African Rand (ZAR) can fluctuate widely, so it’s wise to use a multi-currency account or work with a forex specialist to manage your pension income efficiently.

The New Two-Pot Retirement System

Starting from 1 September 2024, South Africa is introducing the Two-Pot Retirement System—a big change to how retirement funds are managed.

Here’s how it works:

• Savings Pot : You can withdraw from this once a year before retirement.

• Retirement Pot : Locked until you reach retirement age.

• Vested Pot : Your retirement savings up to 31 August 2024, preserved under existing rules.

For expats who’ve worked in South Africa or still hold local retirement savings, this offers new access to emergency funds while maintaining long-term planning. It’s a move towards flexibility—but also one that calls for smart decision-making.

Preservation Funds and Local Retirement Products

If you’re leaving a job in South Africa or taking a break from working, you might transfer your retirement savings into a preservation fund . These funds allow your investments to grow tax-free and avoid immediate withdrawals (and the penalties that come with them).

You can also consider living annuities or retirement annuities , depending on whether you prefer guaranteed income or flexible investment-linked returns. A local financial adviser can help you assess which product matches your needs.

Residency Permits for Retirees

To stay in South Africa long-term, you’ll need the right visa. Two popular options are:

1. Retired Person’s Permit – You’ll need to prove a monthly income of at least ZAR 37,000. This permit is renewable every four years.

2. Financially Independent Permit – This requires a net worth of ZAR 12 million or more and offers permanent residency from the start.

Both options require documents like bank statements, police clearance, and private medical cover.

Healthcare Planning

While South Africa has a public health system, most expats choose private medical aid schemes. These provide access to higher-quality healthcare and faster treatment.

Private health insurance is also a requirement for most visa types, so it’s a non-negotiable part of your retirement plan. Be sure to review plans that cover long-term medication, chronic conditions, and hospitalisation.

Accessing State Pensions

If you’ve obtained South African permanent residency, you may qualify for the SASSA old-age pension. However, this is a means-tested grant and only available to citizens or permanent residents over the age of 60.

Temporary residents and short-term permit holders are not eligible. If you qualify, this pension can offer a helpful supplement—but it’s unlikely to be a full retirement solution.

Estate and Succession Planning

South Africa allows foreigners to own property and draft local wills. However, if you have assets or heirs in more than one country, it’s critical to align your estate planning.

Using a cross-border will, setting up a trust, or consulting with an attorney who understands international probate can help protect your legacy and reduce stress for loved ones.

Cost of Living and Currency Strategy

Retiring in South Africa can be very affordable—especially when compared to Europe, the UK, or the US. But the Rand’s volatility can impact your real-world spending.

To smooth things out:

• Use a forex strategy to convert income at favourable times

• Consider hedging tools if you're transferring large sums

• Work with a planner who understands global currency risk

Final Tips for a Secure Retirement

• Work with a financial adviser who understands both South African and international retirement rules

• Review your tax residency and obligations regularly

• Keep an eye on changes to legislation—especially the Two-Pot system and foreign pension tax exemptions

• Ensure your medical and estate planning is in order

• Plan ahead, but leave room for flexibility—life in South Africa tends to be full of surprises (the good kind!)

In Summary

South Africa offers a warm, welcoming, and affordable retirement destination for expats—but only if you take the time to plan.

By understanding the tax rules, choosing the right pension strategies, and securing healthcare and legal protection, you can enjoy peace of mind and make the most of your new chapter.

Need help planning your retirement in South Africa? Speak to one of our cross-border financial planning experts today—we’re here to make it simple.