Malaysia has a lot to offer retirees, from its sandy beaches and extensive rainforests to its dazzling capital city of Kuala Lumpur. On top of all this, it also boasts relatively inexpensive living costs, so it’s no wonder American retirees are heading to Malaysia. If you want to retire in this southeast Asian nation, you’ll need to understand things like the culture, visa laws, taxes and more. A financial advisor can also help you get your plans in order for a retirement abroad.
Cost of Living in Malaysia
When planning for retirement, it’s important to evaluate your anticipated cost of living, including housing, utilities, travel and lifestyle-related expenses. Conducting a thorough cost analysis will help determine if relocating to Malaysia aligns with your financial goals.
As of November 2024, Numbeo reports that the overall cost of living in Malaysia is approximately 53.6% lower than in the United States, excluding rent. Renting in Malaysia is, on average, 79.8% less expensive than in the United States.
Your specific expenses will vary based on your lifestyle and chosen location. For instance:
- Kuala Lumpur: A one-bedroom apartment in the city center averages around $373 per month, while the same outside the city center costs about $261.
- Ipoh: In this smaller city, a one-bedroom apartment in the city center averages approximately $364 per month, and about $206 outside the city center.
Many expatriates opt to reside on Penang Island, known for its rich culture and coastal beauty. According to International Living, retirees can live comfortably on $2,500 per month, which includes renting a three-bedroom condo with a balcony overlooking the ocean. For those who prefer more modest accommodations, $2,000 per month is sufficient to maintain a comfortable lifestyle.
By carefully assessing these factors, you can determine whether retiring in Malaysia aligns with your financial plans and desired quality of life.
Visa Laws in Malaysia
U.S. citizens can enter Malaysia with a visa on arrival, allowing a stay of up to three months. If you plan to relocate to Malaysia, you’ll need to arrange a visa through the Malaysian Representative Office. First, you’ll need approval from the Department of Immigration before submitting your visa application.
Once you receive approval, you’ll be required to submit your passport, two photocopies of the ID page, two copies of the visa application form, two passport-sized photos and the visa fee.
Additional documents such as a recent bank statement, an invitation letter and two copies of your flight tickets may also be requested. The Malaysian Representative Office will then review your application and make a decision to approve or deny your visa.
Healthcare in Malaysia
Malaysia is renowned in the region for offering affordable, high-quality healthcare. Ranked 34th globally by CEOWORLD magazine, Malaysia’s healthcare system is widely accessible and meets high standards of care. Due to its colonial history with Britain, English is commonly spoken among doctors, and the medical system follows Western healthcare practices.
Accessing specialist care is straightforward: Patients can visit the doctor’s office, register and wait to be seen, with no need to schedule appointments months in advance, as often required in the U.S. Prescription costs are also significantly lower, typically about a third of U.S. prices.
Healthcare expenses are modest compared to the U.S. A first-time consultation with a doctor costs approximately $15 to $65, depending on patient needs, with follow-up visits priced between $11 to $20. For hospital stays, a private room averages around $200 per night, and most diagnostic tests, including ultrasounds, cost under $100.
Malaysia’s healthcare operates as a two-tier system, with both government-run and private hospitals. Expatriates have the flexibility to choose any hospital, and many opt to pay out of pocket if uninsured. Private hospitals are government-subsidized, making private care an affordable option for those who prefer it.
Residents can purchase private health insurance, with deductibles typically under $70 and monthly premiums averaging around $100, far more affordable than most insurance plans in the U.S.
Housing Costs in Malaysia
When planning your move, housing is one of the most significant factors to consider. Many retirees are drawn to Penang, an island state in northwest Malaysia, for its relaxed lifestyle and scenic beaches. However, if beaches aren’t your preference, Kuala Lumpur or the southern state of Johor also offer attractive living options. Housing costs vary based on location and lifestyle preferences.
In Kuala Lumpur, the average cost of a home is around $220 per square foot, while in George Town, Penang’s capital, it’s about $142 per square foot. For comparison, homes in New York City average $1,442 per square foot, making Malaysian housing remarkably affordable by international standards.
Home Buying in Malaysia
The home-buying process in Malaysia is slightly different from that in the United States, but remains relatively straightforward. Similar to buying a home in the U.S., your first step should be thorough research. Familiarize yourself with the types of properties available and the basics of the local lending process, as well as how much you can afford. If you’re interested in building a home, it’s also wise to start researching potential developers.
Once you’ve identified the area where you’d like to live, the next step is to hire a real estate agent. They can guide you through the rest of the process and provide realistic cost expectations.
One of the primary considerations is whether you have enough saved for a down payment in your chosen area. Typically, buyers make a down payment of at least 10% of the property’s value. Additional costs include stamp duties, legal fees, and a fee for the sales and purchase agreement.
After addressing these initial costs, you can apply for a loan. Foreigners are eligible for loans in Malaysia, with the loan amount depending on your credit score and income. Once you have secured financing, it’s important to hire a lawyer. Your real estate agent can likely recommend a lawyer experienced in working with foreign clients. The lawyer will assist with drafting and signing loan agreements and the sales and purchase agreement.
Finally, you’ll make an offer and close the deal. Although the process to buy a home in Malaysia is straightforward, it can still take several months. Be sure to do your research and work closely with your real estate agent and lawyer to find the ideal property for you.
Taxes in Malaysia
Malaysia only taxes income earned in Malaysia. Therefore, if you’re only earning retirement income from a pension or Social Security, you won’t be required to pay taxes on your income. If you do work in Malaysia, you will be taxed up to 30% depending on your income bracket.
As a U.S. resident, you will be expected to file taxes in the United States each year. You’ll have to report any foreign bank accounts, as well.
If you earn any money outside of the U.S., you can use a few different provisions to reduce your U.S. taxable income. These include the foreign earned income exclusion, the foreign tax credit and the foreign housing exclusion, among others. If you’d like to forecast your tax burden more specifically, you may want to consult with a tax expert who is familiar with both U.S. and Malaysian tax laws.
Bottom Line
Malaysia has everything from beaches to jungles, and is an attractive place to retire. Buying a home in Malaysia is relatively simple, and individuals don’t get taxed on income earned outside of the country. Overall, Malaysians are very friendly and welcomes foreigners who want to retire there.
Tips for Retiring Overseas
- Consider talking to a financial advisor about making a plan for retiring overseas. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area. You can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- An essential part of saving for retirement is making sure the money you save remains untouched. Dipping into your savings may seem tempting if you’re low on cash, but you’ll pay for it down the line. Consider creating an emergency fund instead.
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