Philippines Questions — Round 12

Happy New Year!   In addition to being New Year’s Day as I write this, it is also Thursday, the regular day for Philippines Questions.  I will answer as many questions as I can, specifically for a reader or in general, each and every Thursday.  If, that is, people send in questions to begin with.

You can use the dedicated, Spam Free Contact Page on this site, you can write me direct at dave (at) philfaqs (dot) com or you can call me on 1-719-966-4295.  While I am at it I might also recommend to those of you who haven’t yet done so that you subscribe to this blog so you get every article as it is published, it costs nothing and it helps me out as well:  To subscribe with Google Reader or another RSS tool just click on this subscribe to PhilFAQS link.  If you prefer to get each new article in your email box, Subscribe to All the Facts Philippines by Email.

OK, on to day’s question.  Actually a few related questions, all things we have covered partially before but an excellent overview to get the new year underway:

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I plan to retire from the military in 5 years as a Field Grade officer.  My questions are

1) Should I be able to live decently on $4K a month?

2) Should I invest in property now while I am still working or buy later (or possibly just rent)?

3) I have a couple of properties here in the States and want to come up with a good 5-6 year plan if I am going to do this.

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Here are some answers, and advice, random thoughts:

Example of Coming sttractions

1.) The answer today is certainly.  My wife and I live quite comfortably on less than half that amount, I know couples who spend a lot less and, of course, couples who spend a lot more.  The issue is, not the gross amount you have available, but what it means to live decently.  As an example from direct experience.  I served as an NCO and later as a Civil Servant with the USAF for more than 38 years.  During the last few of those years I was in a position that was rated as field grade and I had many friends as well as work associated in your ‘price range’.  because it’s the military we were all making the same money, roughly, I mean pay grades and time in service are public record.  I had field grade friends who retired deep in debt, their Lt Col salary wasn’t enough for their day-to-day needs and college tuition for their children was just a nebulous dream.  I also worked directly for a Lt. Col who retired at 22 years with a net worth of close to $1,000,00 and went on to start his own company.  Do you see the problem in answering an open ended question like ‘living decently’?  I have no idea where you really are on the ‘field grade’ scale.  You’ll have to draw some conclusions for yourself.

Planning is a wonderful thing but planning for retirement in five years is tricky to say the least.  What will prices be in 5 years?  I used to have a crystal ball but it got lost on a PCS .  I can see nothing in the future though that would ever make the Philippines cost more than living in the US, so you’ll just have to be happy with that yardstick.

2) Well the simple answer is you can’t buy property here unless you are a Filipino or former-Filipino citizen.  I still don’t recommend it even if you can cross that bridge.  Property left unattended here in the Philippines is risky.  What you might save on beating inflation is likely to be eaten up by other costs.  Also there has been very little decrease in real estate prices in the Philippines but with the current trend in the US and other countries it is highly likely there will be a drop in prices here within the next year or two.  I would keep my money elsewhere.

You can, however, buy into a quality condominium project and this might be a practical investment.  There are projects starting all the time that will reach completion (turn over date) several years from now.  Buy ins and carrying charges during the years of project completion are often quite small.  Like any investment there are risks, but the amount risked is minimal and some people have done quite well buying in and then reselling their reserved units for nice profits when they became complete and the actual balance becomes due.  Reputable companies often have proper management staff as part of the deal so it’s very easy to come and go as you please, living in a unit for six months and renting it out via professional management when you are abroad.

If you decide to do something like this think your plans through carefully before making any commitments, though, because in addition to a place to live a condo can become the basis for a permanent residency visa … but only when you apply for the visa before the condo purchase.  See the main SRRV site for more info.

As a foreigner you are allowed to lease property for 25 years with a built-in 25 year follow-on option.  The upfront investment in such alease can also be used as qualification for an SRRV.  This has been particularly popular at former US bases, Subic Bay as an example.  I was there recently and there is still a ton of former field-grade government housing available for lease.

3) I don’t see the Philippines-related question here.  If you have properties in the US you can do whatever seems wise with them, hold for income, sell now, sell later or ????.  Many people in my view seem to look at retirement here in the Philippines as an all or nothing deal.  It certainly need not be that way.  I personally sold my US real estate before we moved but that was not because we were moving it was because I felt I was in a ‘not good’ investment and selling (before the market crashed, thank the good Lord) seemed the best thing to do).  When I lived in Japan while still employed renting out my US property provided me an excellent small income and a huge tax advantage, so make any moves in that direction thoughtfully, with long-term tax advice.

There are some significant advantages to the Philippines for US military retirees that are not readily available in any other overseas country.  They include US mail service, in-country VA service, in-country Social Security service, health care via TRICARE Standard (you can’t use Prime or other ‘flavors’ of TRICARE, veteran support organizations like the VFW and American Legion and probably a few others.  On the downside, there are no US bases or other direct military support as you would find in countries with a US military presence.

You have some years yo decide.  You also have 30 days of leave a year.  That’s enough for a total of 150 days ‘in country’.  Invest the time in finding out first hand before you make a decision.

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Related posts:

1. Philippines Questions — Round 8
2. Philippines Questions — Round 9
3. Philippines Questions — Round 10
4. Philippines Questions — Round 11
5. Questions, Questions, Questions 4

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