Why Retirees Are Choosing Penang, Malaysia as their Retirement Destination?

Retirees from the UK, US, Australia, and beyond are increasingly choosing Penang as their retirement destination thanks to the MM2H visa program, low cost of living, excellent private healthcare, and Malaysia's Foreign Sourced Income tax exemption. Combined with island living, world-class food, multi-linguistic residents, and world-heritage sites, Penang offers a unique blend of affordability and quality of life that's hard to match.

I'm Adam Kinsey, a Private Wealth Manager with Melbourne Capital Group in Penang. I've been living here for 16 months now, working predominantly with expatriate retirees who've made the move to Malaysia. As someone who was born in the UK but has Malaysian-Chinese heritage, I had exposure to Malaysia from a young age through my mum's side of the family in Kuala Lumpur, Kota Kinabalu, and Sandakan.

After graduating from Liverpool with a first-class degree in Accounting and Finance, I found myself in the UK struggling to find purpose in the profession. High taxes, long hours, and the culture of arriving at work in the dark and leaving in the dark had me looking elsewhere. I evaluated options in the USA, Canada, Dubai, and across the far-east before landing in Penang, and I haven't looked back.

Penang sits in this unique spot where you get the quietness of island life while still benefiting from Georgetown's rich culture and the conveniences of a developed city. Not to mention, the major and well-connected airport, which can see you fly direct to elsewhere in Malaysia, Thailand and even as far as Hong Kong/Dubai.  

What is the Malaysia My Second Home (MM2H) Visa?

Retirees are choosing Penang for several reasons I will go into more detail about in this article. The MM2H visa is one of the key reasons retirees can afford to make Penang their home. Compared to European residency programs like Portugal or Greece, which can be significantly more expensive and capital-intensive, the MM2H program is seen as affordable and flexible.

The only real financial commitment to Malaysia is the compulsory property purchase, which many retirees rent out while living in their preferred apartment, avoiding the need to commit significant capital to purchasing a MYR 3,000,000+ condominium outright.

But an affordable visa alone isn't enough reason to retire somewhere. So, what else makes Penang special?

What's Daily Life Like in Penang?

Penang is widely recognised as the food capital of Malaysia. It's famous for hawker food, Char Kuey Teow, and the beautiful conglomeration of Malay, Chinese, and Indian cuisine.

Hawkers, which is the term we use for a collection of street food vendors gathered in a single place, are packed full of locals and expats most evenings and lunchtimes. My local hawker in Tanjung Tokong is difficult to get a seat at from Thursday through Sunday, serving everything from Arab to Italian, Japanese to Chinese, Malay to Indian cuisine. My personal favourite? The Japanese sashimi at Viva Food Haven.

So, if you're asking me what's one of the key factors driving expatriate retirees to Penang, I'd say it has to be the food.

What Does It Cost to Live in Penang?

Malaysia in general, not just Penang, is unique in that the Malaysian Ringgit offers a relatively stable currency and a very low cost of living compared to Western countries.

Based on general observations among expatriates, the general discussion centres around not being able to spend their income because of how affordable life is here. It's not often you see retirees saving money.

Typically, you'd expect retirees to be in the decumulation stage of their lives, spending down from their assets and enjoying life. While plenty of my clients enjoy trips to the Maldives, Australia, Bora Bora, and Fiji, for day-to-day life, I'd comfortably say most are living off 10,000-15,000 MYR per month. For context, that's approximately £22,000 GBP per year, from my client discussions in the UK, the average expenditure for retirees would be at least double that.

But it's not just about what you spend, it's about what you get for your money. On a 10,000 MYR monthly lifestyle in Penang, you can enjoy:

• A 3-bedroom beach-view condominium

• Eating out most nights, especially at hawkers

• Weekly golf visits to Penang Golf Club

• Any other leisure activities you enjoy

What Healthcare Options Are Available for Retirees in Penang?

Malaysia operates predominantly on a private healthcare system, and retirees on a MM2H commonly explore private medical insurance options based on personal healthcare needs. From speaking with US-connected expatriates, and those looking for US-compliant investments and structuring their 401k and rollover/Roth IRA accounts for expat life, I've had discussions about healthcare costs back in the States.

Malaysia is well-known for its modern medical facilities and internationally trained doctors, many of whom speak fluent English. Penang, in particular, has top-tier private hospitals, short wait times, and affordable out-of-pocket costs—an important draw for retirees.

I'm yet to hear anyone question the level of service they received when seeking medical care in Malaysia, especially for the price point of insurance.

Below is a list of Penang’s hospital contact details:

What Are the Tax Advantages of Retiring in Malaysia?

Malaysia has a Foreign Sourced Income (FSI) exemption, meaning income or gains remitted into Malaysia are not taxable in Malaysia, though they may still be taxable in the jurisdictions where the assets are domiciled. This exemption has been extended until 2036.

For retirees with overseas assets, retirement accounts offshore, and income from highly taxed jurisdictions like the UK, there are multiple tax advantages to retiring in Malaysia compared to countries like Thailand, where there are generally fewer tax advantages on the remittance of income and gains.

This means an average UK expat who would normally pay income tax rates of 20-45% (and up to 60% in some instances), and capital gains tax of 18-24% on the sale of shares, may experience difference in tax treatment depending on individual circumstances, applicable laws, and tax residency rules. Professional tax advice should be obtained before making any decisions.  

Frequently Asked Questions About Retiring in Penang

How long does the MM2H visa process take? The MM2H visa application typically takes 3-6 months to process, depending on the completeness of your documentation and current processing times.

Can MM2H visa holders work in Malaysia? MM2H visa holders can work in Malaysia, but you'll need to obtain separate work authorisation. Many retirees choose not to work and instead focus on managing their offshore income and investments.

What is the minimum age requirement for MM2H? There is no minimum age requirement for the MM2H program, though it's primarily designed for retirees and those seeking long-term residency in Malaysia.

Is Penang safe for foreign retirees? Penang is considered very safe for expatriates and retirees. Malaysia ranks as one of the safest countries in Southeast Asia, with low violent crime rates and a strong police presence.

Do I need to speak Malay to live in Penang? No. English proficiency is excellent among Penang's residents, particularly in Georgetown and the expat-heavy areas. You'll find English widely spoken in restaurants, hospitals, government offices, and shops.

What's the climate like in Penang year-round? Penang has a tropical climate with temperatures ranging from 23-32°C (73-90°F) year-round. The wettest months are typically April-May and September-November, but rain is usually brief and doesn't disrupt daily life significantly.

Why Penang Stands Out for Retirement

Finances aren't the singular reason anyone picks where to live, though they're undeniably important; look at the influx of millionaires entering Dubai, for example. When Malaysia is compared to its Southeast Asian counterparts like Singapore or Thailand, it continues to look attractive. With Singapore, you wouldn't benefit from the cost-of-living advantages. With Thailand, you'd broadly be missing the tax advantages that many retirees are looking for.

As for Penang specifically, whether it's Penang Hill's wildlife and rainforest, the temples, food, golden beaches, or Georgetown's UNESCO World Heritage sites. It offers a single location that's well-connected and beautiful. The local residents have strong English skills and are friendly and welcoming, with a well-established reputation for fabulous hospitality.

If I had to write about every single reason to live in Penang, I'd never stop. But I hope this article gives you insight into what this beautiful island can offer for your retirement.

About the Author: Adam Kinsey is a Private Wealth Manager with Melbourne Capital Group Ltd, an independent wealth management firm and insurance brokerage licensed and regulated by the Labuan Financial Services Authority (LFSA). Based in Penang since 2024, Adam focuses on working with expatriates and retirees on general wealth and retirement planning considerations, including cross-border lifestyle and protection planning. Melbourne Capital Group works alongside licensed tax and legal professionals to ensure services are delivered within appropriate regulatory boundaries.

If you are considering retiring in Penang and would like to learn more about general financial planning considerations, feel free to get in touch: adamkinsey@melbournecapitalgroup.com or connect with me on Linkedin.

Disclaimer
This article is provided for general informational and educational purposes only and does not constitute financial, investment, tax, legal, immigration, or insurance advice. The content is not intended to be, and should not be relied upon, as, a recommendation or personal advice.

Financial, tax, immigration, and healthcare outcomes vary based on individual circumstances, applicable laws, regulatory requirements, and jurisdictions. Readers are encouraged to seek advice from appropriately licensed professionals before making any decisions.