Retiring to South Africa

by Jose Marc Castro on August 6, 2009

FLAGsouthafrica200To the rest of the world, South Africa is a kaleidoscope of images — apartheid and black empowerment, Nelson Mandela and Desmond Tutu, blood diamonds and de Beers engagement rings, Christmas festivities at the beaches and safaris where visitors can view, but not shoot, the big five wild game.  For people poised to retire from a job, but not retreat from life, South Africa may be IT, an exceptional and exotic landscape where people are hopefully building a peaceful, prosperous and sustainable community.

This rich and exotic country is located at the southern tip of Africa bordered by Namibia, Botswana, Zimbabwe, Mozambique, Swaziland and Lesotho. As one of the leading countries in Africa, the pinnacle of this leadership is best showcased in its hosting of the 2010 FIFA World Cup, the first African country to do so.

Climate in South AfricaGovernment in South AfricaTax System in South AfricaMedical Care in South AfricaReal Estate in South AfricaShopping in South AfricaCost of Living in South Africa

A New Life in South Africa

Climate in South Africa

The South African climate is marked by its pleasant warmth and cheerful sunshine.  Because of its greater elevation, South Africa is not as hot as countries like Australia. Temperatures are usually below 30 degrees C during summer days while night temperatures during winter can go down to freezing or below.

Summer lasts from October to February, with sunshine days followed in the afternoon with strong but brief showers of rain that cool people down.  Autumn lasts from the months of February to April when it is still warm but more comfortable than summer. By winter (May to July) people can enjoy sunny days and cold nights. All people need, however, would be light coats or sweaters. Spring (August to October) is a festival of wild flowers.

Government in South Africa

Britain, the Netherlands and France vied to be the colonial ruler of South Africa.  This contention ended with British primacy in 1795 and Dutch rule for three years (1803-1806). In 1910 South Africa finally became a self-governing member of the British Commonwealth. However in 1948 the elected National Party government instituted apartheid and the white minority was legally given preference and enjoyed privileges not accessible by the black majority. Because of this South Africa became a pariah in the international community and was isolated  from other countries for 30 long years.

The black protest movement reached a high point in 1976 when students protested the decision to make Afrikaans as the medium of instruction.  The African National Congress (ANC) used all possible venues of struggle against apartheid, and was supported by international bodies such as the UN and groups including the World Council of Churches. The long struggle resulted in a new constitution, the end of apartheid and the 1994 democratic elections where Nelson Mandela became the first freely elected black South African president. Mandela also won the Nobel Peace Prize. Since outlawing apartheid, South Africa has become dominated by the black majority, with multi-party elections and governance. The main drawback though is its protest happy attitude, earning the moniker, the “most protest rich country in the world.”

South Africa is a multiracial democracy, and currently the most advanced country in the continent, with an economy based primarily on mining, followed by agriculture and manufacturing. There are still many problems in fulfilling the expectations of South Africa workers and peasants regarding more jobs, higher wages, and better living and working conditions. However, South Africa has the potential to achieve more progress in erasing poverty in the coming years.

Tax System in South Africa

Individual income tax is progressive; individuals earning less than R60,000 a year do not have to file income tax returns. South African residents are taxed on their global income while non-residents are taxed on their locally sourced  income, which includes salaries, fees, rent, and interest from loans but not dividends.  Foreigners who enter the country must declare their foreign assets. Tax residents have been defined as those people who have stayed in South Africa for 550 days and more within three years or 92 days and more each year for three consecutive years. Although this is still being discussed, in principle, foreign pensions will be subject to income tax in SA. In cases where there is no double taxation treaty with the country concerned, relief can be granted through credit on foreign taxes paid. Where there is a double taxation treaty, the relevant provisions will be followed.

A post at the South Africa Expat Forum last July 5, 2009 discussed provisions on the South African tax system,

Be careful – this is NOT necessarily so. You cannot exclude the $90K unless you fulfill the requirements for either “bona fide resident” or “physical presence” test. Both of those include working outside the US for a full 12 months (either 12 consecutive months or one full calendar year). If your assignment is any less than 12 months, you don’t qualify for the exclusion and you pay your regular taxes to the US. (Your assignment will be considered to have been an “extended business trip” – which could make some of your travel and accomodation expenses deductible.)

All living and transportation expenses plus any remuneration received in kind (say, a company car or housing) is taxable.

That said, there are tax provisions to assure that you aren’t double taxed on your income. If your income from this assignment is taxable in the US, chances are it won’t be taxable in SA, though I’m not at all familiar with SA taxes so can’t advise you whether or not you will need to file to claim this exemption.

Medical Care in South Africa

The public health sector is responsible for delivering free health services to fully 80% of the entire population.  The public sector has shifted to primary health care and is overworked and under-funded, especially with the threat of HIV-AIDs on the country’s families, economy and program for development.

The private sector operates alongside the public sector, but focuses on giving expensive and state of the art services to the middle and upper classes who have health insurance. The private sector also caters to foreigners who want reasonably priced but world-class quality medical services and are willing to travel to South Africa to get them and enjoy a vacation to boot. The private sector serves only 20% of the country’s total population.  At present, there are 200 private hospitals that employ majority of health professionals, except for nurses.  Most private hospitals are in urban areas and are focusing on tertiary and specialized medical services.

Expatriate retirees should have no problem with access to the numerous private hospitals staffed by capable and well-trained health professionals.

Real Estate in South Africa

There is no prohibition against foreigners buying land in South Africa. The process is also not difficult to follow if you get a reputable real estate agent or a lawyer if you are going to buy directly from the seller. The agent usually charges a fee equivalent to 6% of the selling price but this is paid by the seller.  The buyer will pay for legal fees and taxes.  For the past few years, the South African real estate market has been growing fast, especially in Cape Town where it is growing annually by 25% and more. Real estate investment is a good strategic move, and buyers are advised not to sell their properties for as long as possible. Because of the current financial crisis, residential property prices in South Africa have fallen to their lowest in 23 years as the country’s first recession for 17 years takes its toll on the real estate market.

Shopping in South Africa

You can choose to shop in malls, boutiques, large flea markets, farmers’ markets or from sidewalk vendors and ambulant hawkers. You can shop in both cities and rural areas and buy wire sculptures, pots, baskets, fruit and vegetables. Or you can swing to the other extreme and buy diamonds, gold, platinum, and South African couture that are available in modern shopping centers. You can also visit Art Africa for valuable pieces of art and craft. There is such variety that you may find it hard to make choices.  All you really need is a fat wallet to pay for your purchases. Haggling though is not an option in shops but is the norm with hawkers.

Cost of Living in South Africa

There is no big difference between the cost of living in South African cities that are frequented by expatriates and similar cities in Europe and the US. Food in South Africa is cheaper, but only slightly, than food in Europe. Of course if you eat local and maintain a relatively simple lifestyle, you can manage to save and stretch your money.

If you live alone, you can manage on US$1,350 a month or US$1,850 a month for a couple. The biggest single items are rent, which ranges from US$500 to US$650 a month; food, which ranges from US$250 to US$360 a month; and leisure, which rages from US$115 to US$180 per month.  The monthly budget for one or two persons cited above includes rent, food, utilities, cable TV, heating costs, sports and holiday expenses,  restaurant meals, newspapers, car maintenance and insurance, (only one car), etc. An expat echoed these costs at the South Africa Expat Forum last October 26, 2007:

With $3000 per month you can have everything for a family of 4 starting fresh .This includes insurances car payments rent or morgage payments. If you are looking for more luxury you should look at $4000+ per month.

{ 4 comments… read them below or add one }

travelsouthafricatoday March 1, 2012 at 12:17 pm

There are certainly tons of great retirement communities in South Africa. I am a retiree and am lucky enough to live in one of the best retirement villages in the Western Cape – Helderberg Manor. While people will always have their own opinions on these things, I truly believe that South Africa is an incredible country with so much to offer during the twilight years – fantastic lifestyle facilties and amenities and loads of terrific benefits. It’s just a matter of finding the perfect retirement village.


Suz November 14, 2012 at 5:12 pm

My husband and I would love to retire someplace out of the US. You mentiolned you live in a retirement village. Do you own your own home or rent? Is housing expensive (i.e. 2 bedroom/2 bath house)?


George Hilliker November 26, 2012 at 2:20 am

Can one find something small (1 bedroom flat) in the Brittany Bay or St. Helena Bay area. I see that real estate is fairly inexpensive at this time.




charlotte ann June 27, 2015 at 12:59 pm

What the climate description did not mention is that there is no central heating in most houses and even businesses in South Africa. I have lived in the western Cape for 13 years and still cannot get used to walking into my kitchen in the mornings when the thermometer reads in the 40s F-generally June through August. Yes, we have electric (expensive to run) and gas heaters and fireplaces but nothing works like central heating. You’ll be wearing more than a light coat or sweater inside your house.


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