How Much Money do I Need to Retire in the Philippines?

I have answered this question hundreds of times and I have written on this topic probably a dozen times. Recently I saw another article (written by Jean Folger) and I thought it should be shared. So let me share it below along with several of my own comments. Enjoy!

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 Retire in the Philippines with $200,000 of Savings? ​
By JEAN FOLGER
 Updated Feb 6, 2020 What Is the Cost of Retiring in the Philippines? More and more people are choosing to retire abroad to enjoy new experiences, affordable healthcare, and a lower cost of living. One destination long popular with expats is the Philippines, a nation that spreads out over more than 7,000 islands. Its borders are Taiwan to the north, the Pacific to the east, Indonesia and Malaysian Borneo to the south, and the South China Sea to the west. A large expat community enjoys everything the country is known for— beaches, beautiful scenery, tropical climate, and friendly locals—plus affordable healthcare and a low cost of living. Other perks: The Philippines extends a number of incentives to expat residents, including discounts for the 60+ crowd and duty-free import of household goods.

No matter how much you have saved for retirement, you may be able to live better—and make your money stretch further—if you retire abroad. 
KEY TAKEAWAYS: 

• For retirees, the Philippines has affordable healthcare, a low cost of living, discounts for the 60+ crowd, and duty-free imports of household goods.
• Expats can live comfortably in the Philippines for about $1,500 to $2,000 a month, according to International Living.
• Retirees should remember that living in a country is different to vacationing in a country, and they should adapt their spending habits accordingly.
• It is wise to speak with a tax specialist when making plans to retire abroad.

Understanding Retirement in the Philippines Each year, International Living’s Global Retirement Index ranks retirement destinations around the world, measuring factors such as climate, healthcare, benefits and discounts, and the cost of living. According to International Living, expats can live comfortably in the Philippines for about $1,500 to $2,000 a month. If you live on $800 per month – probably the lowest amount on which most retirees could live comfortably – your $200,000 savings account would last about 21 years; live on $1,200 a month, and your savings would last 14 years. This assumes the unlikely situation that your monthly expenses stay the same over the years and that you have no other income or expenses during retirement. (My comment: This also assumes that you earn 0% on your money. Personally, I invest my money in modest investments and I still earn at least 5% on a "bad year". So using my calculation... $200,000 x.05=$10,000 or $833/month. Let's continue with Jean's article)...

Social Security In addition to savings, many retirees have access to other income sources during retirement. The average retired worker’s Social Security benefit in 2019, for example, was $1,461 per month. (I personally agree with these numbers for 2019). 

Adding Social Security into the mix alone makes retiring comfortably in the Philippines with $200,000 to start seem like a real possibility. Your monthly benefit might be enough to cover most of your living expenses—housing costs, food, activities, and basic healthcare—with money left over for the occasional trip back home or to cover an unexpected expense. (Me doing the math and using my assumption of a minimal return on my $200,000 investment of $833/month, here is what I come up with: $833 + 1461 = $2294 AND you still have your initial investment of $200K in the bank!)

Rent or Buy? Like anywhere in the world, rental costs in the Philippines depend on the property's location, size, and condition. According to city and country database website numbeo.com, as of 2020, the average monthly rent for a one-bedroom apartment in a city center is $288; outside a city center, the rent drops to an average of $160 per month. For three-bedroom properties, the average rent is $578 inside cities and $324 outside cities.

While rent is generally considered affordable if you plan on living in the Philippines for a while, buying a condominium might be more cost-effective. Although foreigners, in general, are prohibited from buying property in the Philippines, the Philippine Condominium Act makes it possible for expats to purchase condominiums, essentially because condominium ownership does not convey any type of ownership in the land on which it sits. (We agree on the condos in a certain aspect. We are considering building a limited number of Ocean View condos 12-18 condos on a 15 acre seaside lot. Each condo would be an independent unit (like a house) with each condo having 1 or 2 bedrooms, a living room, and a kitchen. Sizes would be 80 square meters to 90 square meters (   861 to 968 square feet) with prices starting at only US$110,000). If interested, email PiliNutFarms@gmail.com

Spending Less If you end up living in a place where you have previously enjoyed vacationing, it can be difficult to make the financial switch to everyday life. One mistake many new expats make is acting—and spending—like the are still on vacation. While it is normal to splurge on vacation, spending too much on meals and attractions for the long term can burn through your retirement budget.

One way to avoid overspending is to find out where the locals go for meals, groceries, nightlife, entertainment, attractions, etc. By getting to know the local vendors and other expats, you can find out where to buy things at the “local” rate instead of the “tourist” rate. This is a hugely important step in maintaining a low cost of living abroad. You might already do this at home without even thinking about it. Do the same thing abroad and your money will last much longer.

The Bottom Line The uncertainty of anyone's lifespan makes it impossible to predict if $200,000 would be enough to last through retirement anywhere—even in a country with a low cost of living such as the Philippines. But living abroad during retirement can offer a better quality of life for your money and stretch your retirement dollars further.

As with any retirement destination abroad, it is a good idea to visit the area before making any decisions and to visit from a resident’s perspective rather than as a tourist.  

(My personal Note: I met with a qualified attorney and a tax specialist before retiring abroad. It helped me in such a financially positive manner that I am so thankful that I did). 

In the next Blog Post, I will talk about expats retiring in the Philippines instead of going to a nursing home in their home country. Click on the RSS feed and you will be automatically notified when it's posted. 

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Greg Pasden is an international best selling author, a world traveler, a Philanthropist (and he has a Global surprise he'll be sharing in May of 2020).

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