How to Retire in Malaysia: Costs, Visas and More

By Ashley Chorpenning

Malaysia has a lot to offer retirees, from its sandy beaches to its 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 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. Here’s a summary of what you should know about retiring in Malaysia.

One of the key factors when planning for retirement is assessing your cost of living during your golden years. You’ll need to account for housing costs, utilities, travel, and expenses associated with your lifestyle. Therefore, before you can decide if it makes sense to move to Malaysia, you’ll need to complete a cost analysis to decide if a life there fits within your budget. According to Numbeo, a website that collects pricing data from citizens, the average cost of living in Malaysia is 47.19% lower than in the United States. It’s important to note, however, that this number doesn’t include rent.

Renting in Malaysia is, on average, 73.73% less expensive than rent in the United States. Of course, your cost of living and rent will depend on your lifestyle as well as the city you choose to live in. For example, a one-bedroom apartment in the capitol of Kuala Lumpur will cost about $517.45 a month in the city center, and a one-bedroom apartment in the suburbs will cost on average $297.71. Whereas a one-bedroom apartment in the smaller community of Ipoh would cost, on average, $254 per month in the city center and $166 per month outside the city.

Many expats chose to live on the island of Penang, off the nation’s west coast. For $2,500 per month retirees can live “extremely well,” according to Internationalliving.com, and get a three-bedroom condo with a balcony overlooking the ocean. If you can do without such a view or don’t need to live right off the beach, $2,000 per month will more than suffice.

American citizens can visit Malaysia and receive a visa on arrival for up to three months. When you move to Malaysia, you will need to go through the Malaysian Representative Office to arrange a visa. To get your visa, you will need approval from the Department of Immigration before applying.

Once you have gained approval, you will need to submit your passport and two photocopies of the ID page, two copies of the visa application form, two passport photos and a visa fee. You will likely also be asked for a bank statement, an invitation letter and two copies of your plane tickets. Then, the Malaysian Representative Office will evaluate your visa application and either approve or deny it.

Malaysia is known in the region for its affordable, high-quality healthcare. The World Health Organization ranks the nation’s healthcare system at 49th out of 191. Malaysia was once colonized by the British, so many of the doctors speak English. Additionally, the medical system adheres to Western medicine standards.

To receive healthcare from a specialist, you simply go to the doctor’s office, register and wait to be seen. Unlike in the U.S., patients do not have to schedule appointments for months in advance and prescriptions typically cost about a third of what they do in the United States.

The cost of healthcare is also small in comparison to the U.S. A first-time doctor’s visit typically costs about $15-$65, depending on the needs of the patient, and follow-up visits are around $11-$20. If you need an overnight stay in a hospital, a private room will cost about $200. Specific tests typically cost less than $100, including ultrasounds and more.

Malaysia has a two-tier healthcare system: government-run and private. Expatriates can choose whatever hospital they want to go to and may pay out of pocket if they do not have insurance. The private hospitals are subsidized by the government, so those who can afford it typically opt for private care.

Residents of Malaysia can buy private insurance. A deductible is typically less than $70 and costs an average of $100 per month. This is significantly less than most insurance options at home.

As you plan to move, one of the biggest factors you will consider is housing. Many retirees choose to live in Penang, an island state in northwest Malaysia. If beaches aren’t your thing, plenty of people choose Kuala Lumpur or the southern state of Johor. Depending on your tastes, the cost of housing can fluctuate.

The average home cost in Kuala Lumpur is about $275 per square foot. This in comparison to George Town, the capital city of Penang, where an apartment costs about $154 per square foot. When we compare these cities with New York City, where homes cost about $1,372 per square foot in the city, Malaysian homes are quite inexpensive.

The purchasing process is a bit different than in the United States but is relatively simple. As with home buying in the U.S., the first step is to do plenty of research. You will want to understand what types of homes you can buy and a little bit about the lending process. If you plan to build a home, you will want to start to research possible developers.

Once you have done some research and have an idea of what area you want to live in, hire a real estate agent. They will be able to help you through the rest of the process and give you a good idea of how much you can expect to spend.

The first thing you will want to consider is if you have enough for a down payment in your desired area. Most people make a down payment of at least 10% of their home’s total value. You will also be required to pay stamp duties, legal fees, and a sales and purchase agreement fee.

The next step is to apply for a loan. Foreigners can get a loan in Malaysia. The amount you can purchase depends on your credit score and income. Once you have procured the funds for your home, you will want to hire a lawyer. Your real estate agent might be able to help you choose a good lawyer that has worked with other foreigners in the past. The lawyer will help you draft and sign any loan agreements and the sales and purchase agreement.

Then, you will make an offer and close the deal. While the process is straightforward, buying a home in Malaysia can take several months, so do your research upfront and be prepared to work with your real estate agent and lawyer to find the best property for you.

Malaysia only taxes income earned in Malaysia. Therefore, if you are only earning retirement income from a pension or Social Security, you will not 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 will 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.

Malaysia has everything from beaches to jungles and is, therefore, an attractive place to retire. Buying a home in Malaysia is relatively simple, and individuals do not get taxed on income earned outside of the country. Overall, Malaysians are very friendly and welcomes foreigners who want to retire there.

• Consider talking to a financial advisor about making a plan for retiring overseas. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will 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.

Photo credit: ©iStock.com/FilippoBacci, ©iStock.com/stockstudioX, ©iStock.com/Sam Song

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