How To Retire in the Philippines with $200,000 of Savings

Earning a Livingt in the Philippines Without a Job

How To Retire in the Philippines with $200,000 of Savings?

(Updated August 8 2019)

Interesting title, eh?  If I had $200,000 USD in savings would I even be retired in the Philippines?  Would you?



Well, let’s explore so issues and possibilities.

A while back I posted this article about retiring here in the Philippines with NO money.  You might want to read that if you haven’t already.  Just click on the link, go ahead, I’ll wait for you here:

How To Retire in the Philippines With No Money

As that article says, you absolutely have to have some money to retire in the Philippines, but the actual monthly needs may be very small.

But what if you have been lucky in life and have been a good personal money manager over the years?  What if you have a nice “pile” sitting in the bank or in some IRA, 401K or another investment plan?

Current national statistics on savings are scary, very few people of retirement age have any savings at all.

They plan to live their retirement the same way they have lived the years landing up to it, paycheck to paycheck, substituting Social Security for a J*O*B.

If you’re one of the smart ones among us and you do have a healthy savings account going into retirement, you might want to read this recent article from investopedia.com.  It raises some interesting points and gives some good information about retirement in the Philippines.

And some information which I feel needs correcting, so I will, below.

Retire in the Philippines with $200,000 of Savings?

How To Retire in the Philippines with $200,000 of Savings?More and more people are choosing to retire abroad to enjoy new experiences, access to affordable health care 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 health care 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 the duty-free import of household goods…

Well, pretty much true.

But two areas of concern in this introduction are “health care” and discounts for the “60+”.

First, healthcare in the Philippines is “spotty”.  If you live in Manila, Cebu, Davao or a few other large cities, you should be able to find all the health care you need.

But if you go very far out in the “provinces” at all, where the cost of living is much cheaper, you may not be able to find even decent basic health care.

And traveling to larger cities is often a lengthy, expensive and arduous project.

Secondly, the discounts for seniors over 60 are for Filipino citizens who physically reside in the Philippines ONLY.

There are harsh penalties for violating this law, so no discounts for most expats.

Low Cost of Living

Each year, International Living’s Global Retirement Index ranks retirement destinations around the world, measuring factors such as climate, healthcare, benefits and discounts, and cost of living.

For the 2017 Index, the Philippines scored a 90 out of 100 for cost of living.

International Living also shows that expats can live comfortably in the Philippines for about $800 to $1,200 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 ($200,000 ÷ $800 = 250 months, or 20.8 years); live on $1,200 a month and your savings would last 14 years ($200,000 ÷ $1,200 = 166.66 months, or almost 13.9 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.

OK, fine arithmetic there.

But I am here to tell you, even if you have a substantial “nest egg”, like $200,000 built up, it would be very unwise for you to just “burn it up” over X amount of years.  Why?

  1.  Impossible to foresee future costs.
  2.  Impossible to know how long you will live.
  3.  Having nothing but passive savings to occupy your time is a recipe for boredom and discontent.  As we age, we are happier and even healthier learning new things and working projects and programs for the future.

What’s My Alternative Suggestion?

Use part of that $200,000 to invest in an online business which you can operate from anywhere.  I’ll be writing a lot about this strategy real soon now, but to be brief,

I’d hold roughly half my fictional $200K in conventional investments and buy several established online business, each making $1000 USD per month and then basically sit back and enjoy life.

Here’s one place you can start looking.  These guys are long-time friends of mine who came to the Philippines and built a worldwide, multi-million dollar a year business out of nothing.  Great success story.

All that being said, I have no business relationship with them, I just highly recommend their services:

Buy & Sell Quality Online Businesses

What I would not do under almost any circumstances is to get involved with trying to set up some sort of Philippine business to supplement my retirement.

Not recommended at all.

Social Security

In addition to savings, many retirees have access to other income sources during retirement. The average retired worker’s Social Security benefit, for example, is $1404 per month for 2018.

Adding Social Security into the mix alone makes retiring comfortably in the Philippines with $200,000 start to seem like a very 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.

All Correct But a Few Warnings Are In Order.

First and foremost I strongly advise that expats do NOT have their Social Security benefits direct deposited in a Philippines bank.

This CAN be done and it works OK for many, but in my 15 or more years giving advice on moving to the Philippines I have heard more horror stories on issues of direct deposit Social Security than on nearly any other issue.

First of All, Keep a US Bank or Credit Union:

If you have your Social Security Benefits sent directly to a Philippine bank, the Social Security Administration (SSA) will require the account be in your name only (not joint so that your spouse can have access).

Also, they will require that the account be what used to be called (and still is in the Philippines “passbook savings only”.  No ATM cards, no checkbooks, withdraw money in person, over the counter at the bank, only.  Very inconvenient in my book.

Last but certainly not least.

The so-called “direct deposit” is not really “direct”.

To use this service you must open an account with one of only a few banks, like BPI (Bank of the Philippine Islands).  If there isn’t a local branch near you?  Well, sorry about that.

Next, when the SSA sends you your benefits they are sent to a commercial clearinghouse bank in New York City … no public access, no customer service, etc.

Next, this anonymous third-party bank sends your funds to the BPI of New York bank.

(this is a separate corporation from BPI Philippines, with it’s own schedule, rules and customer service organization.)

Finally, BPI New York sends your money to your account at the BPI Philippines where it is available for your use.

All this costs you about $7.00 each month in fees.

But the time delay and the chances of something going wrong when your money passes through so many hands and different corporations is scary.

What’s My Solution?

I have my Social Security benefits sent directly to my US Federal Credit Union.  There’s no charge and it happens like clockwork, third of every month when the SSA sends out retirement checks.

How do I get my hands on my money in the USA hen I am in the Philippines?

Two ways:

  1.  I can write a check, payable to me, drawn on my US Credit Union account and deposit it in my Philippine US dollar bank account.  This costs a $5.00 USD foreign check deposit charge and also has the disadvantage of my bank holding the funds for 25 banking days before they are available in my account.
  2.  Or I can use the services of Xoom.  They will transfer the money from my US bank account to my Philippine bank account in literally seconds.  Their fees for this service are about $5 USD per thousand USD transferred.  No muss, no fuss, no bother and my money is normally available before I can log out of their website.

Once my money is available, I can withdraw it as US dollars and seek my own money changing service, or I can withdraw it as Philippine pesos, converted from US Dollars at my bank’s latest daily conversion rate.

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 2018, the average monthly rent for a one-bedroom apartment in a city center is $230; outside a city center, the rent drops to an average of $129 per month.

For three-bedroom properties, the average rent is $505 inside cities and $277 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.

For information on which locations you might want to investigate, see Find The Top Retirement Cities In The Philippines. If you buy something, see Do You Get U.S. Tax Deductions On Real Estate Abroad?

This Is Basically Correct, except for One Glaring Error:

The statement, “foreigners, in general, are prohibited from buying property in the Philippines” is dead wrong.  The Philippine constitution is quite clear that foreigners may not, under any circumstances, purchase any amount of the land area of the Philippines.

Over the years I have seen many, often quite complicated and apparently illegal schemes to allow foreigners to purchase land in violation of this law.

My advice?

ay far away from any of these schemes and accept the fact that as a foreigner you can only BUY a condominium.  But you can rent, or long-term lease property (up to 50 years) without any restrictions.

Spending Less

If you end up living in a place where you’ve 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 they’re 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 can last much longer.

Excellent advice.

Many expats, when coming to the Philippines, attempt to live apart for “the locals”, interacting with and dealing with only other expats, and patronizing places that serve and sell only (expensive) expat style items.

If you do this you will not only increase your month expenditures dramatically, but you’ll miss a lot of the “flavor” and the benefits of living in another country.

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 like the Philippines – but living abroad during retirement can offer a better quality of life for your money and make retirement dollars stretch further.

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

In addition, taxes for those retiring abroad can be quite complicated. As such, it is always recommended that you work with a qualified attorney and/or tax specialist when making plans for retiring abroad. Start by reading How To Plan Your Retirement In The Philippines. Then check out Plan Your Retirement Abroad.

Taxes Will Always Be With Us

The last thing I want to talk about is taxes.

First of all my lawyer requires me to say this:  I am not an attorney, a tax accountant, CPA , IRS Registered Agenetor any qualified accounting or tax specialist.  I advise o to seek and use one to properly set up your financial life overseas.

You Don’t Have To Pay Taxes Overseas, Right?

The first thing US expats often run afoul of is the idea that somehow if living outside the USA they do not need to pay US income taxes.

This is a very common false belief I hear fellow expats spout all the time.  Be very careful in your financial planning because it is just not true.

Depending upon your actual income you might indeed not have to pay US taxes, but ALL US citizens must report all income from any source, worldwide.

From there you calculate to determine if you actually owe any tax to Uncle Sam.  But you MUST REPORT!

The Philippines Does Not Tax You, Correct?

The Philippines does not tax you ion income from sources outside the Philippines, so unless you are employed in the Philippines, or operating a business there, you don’t have to worry about Philippine tax.

But You Do Get a Very Big US Tax Break

An important fact about US taxes to consider, especially if you take my advice and operate an online business as part of your retirement funding is, all “earned” income while you live outside the USA can normally be excluded from your US tax liability, up to $105,900 in the coming year by use of the US Foreign Earned Income Exclusion. (FEIE).

It is important to remember that the FEIE covers ALL income earned while you live overseas, not, as many conclude, only income earned from countries other than the USA.

So, if you were to buy and operate an online business that earned in US dollars, all your income up to $105,900 would probably be excluded from the money you would owe taxes on.

But a trap many expats tend to fall into is Social Security, government and private pensions and other retirement income is NOT considered “earned” income by the IRS.

But earnings from a business which you own and actively operated certainly is “earned”.

Meanwhile, what is else do you need to know about



How To Retire in the Philippines with $200,000 of Savings?

10 Replies to “How To Retire in the Philippines with $200,000 of Savings”

  1. Where can you find these $200-$300 a month apartment in Taguig or Manila? I checked online and they’re all in the $400s?

    Brief note I plan to live all there. And you’re absolutely right about having an online business.

    1. @ Derek

      Thanks for contributing. I’m a little confused, though. I don’t see anywhere that I mentioned $200 to $300 apartments in Taguig or Manila. I did quote

      http://www.numbeo.com‘s

      rental figures which come from actual people living in the Philippines.

      Taguig is a very interesting pace. It has a lot of very crowded, slummy areas where $200 a month rent would be a fortune, yet it is home to BGC (Bonifacio Global City), a very upscale, Westernized area where you’d. be lucky to rent for a thousand USD per month.

      I live in Marilao, Bulacan, about 10 or 12 miles from that area of Metro Manila and I am not intimately familiar with prices inside the city. I wouldn’t live there on a bet. In my little town, a 3 bed 1 bath house will rent for under $250 any day of the week. Apartments generally for less, but this is a “bedroom” community for people working in Manila and houses are more common.

      Finding things online is very problematical. Most rentals are never listed anywhere online and if they are the prices are boosted up because it’s perceived only foreigners are going to be searching there.

      That being said I have seen some good deals all over the Metro for $200 to $400 on Airbng. Good luck.

      My advice is you need several thousand just to get set up. Rent a furnished condo is the best bet. Rent something off Airbnb short term and then explore. You can live on$1500 a month easily, but the question is, WILL you live on that much. It’s very easy to eat out all the time, go to bars and such and you can easily blow $15,000 a month. The cost of living depends very much on you and how frugal you will be.

      Best of luck.

    2. Hello Derek

      It doesn’t matter how much money you have to live on in the Philippines, you can get by on it. It is just the level of comfort, quality and ambiance that will vary. Even in Manila.

      However, EVERYTHING in Manila seems to be more expensive for EVERYTHING.

      So if you would like to be comfortable, I don’t think Manila is a good location to be thinking about when living on a usd $200,000 nest egg.

      Dave mentioned medical care, There are locations that are big enough to have decent medical care but still have low costs. One such place is Ormoc on Leyte.

      3 weeks ago, I was offered a 2 storey, 2 bedroom townhouse in a gated community, about 4 kilometres from the city centre, for P8000 per month plus utilities. That is about usd $160 per month, plus utilities. You are probably worried about internet speed. I don’t know how fast your internet needs to be but I use GLOBE AT HOME. It is a box with a SIM card that you connect up to 5 phones or laptops to. It is portable so long as you have a power outlet to plug into. So you put it in your bag, then at your next location, plug it in and you have internet within seconds. I have visited this gated community multiple times staying opposite the town house I was offered. My speeds vary between about 3mbps and 20mbps with it operating across the day at about 10mbps. I pay P999. That is for 30 days or 65gb of data, which ever comes first. Where people hang out at night and watch live bands and dine by the sea in Ormoc City a 330ml bottle of San Miguel Light is P40 and tequila sunrise is P80. If you want a big city, Cebu City is a 3 hour fast ferry ride away. The fast ferry costs P600. If you want to do Cebu City as a day trip, it can be done if you depart on the first fast ferry of the day and return on the last fast ferry of the day from Cebu City. Ormoc has the nearby Lake Danao where you can hire a floating cottage for the day, good for about 10 people, and have a picnic and barbecue on your floating cottage. Also within day trip distance are multiple waterfalls on Biliran, Kalanggaman island, Cuatro Islas and Canigao Island. So Ormoc is what i would call a good and comfortable USD $800 per month location for living.

      1. @ Jim Sibbick

        Hi Jim,

        Thanks for a valuable contribution. There’s nothing better than real-world experiences to make an article worthwhile. A few months back you published an excellent video detailing life in a hotel you were renting by the month in Cebu. I learned a lot from that.

        Have you moved to Ormoc? Certainly seems lovely there. All the best Jim, stay happy.

        1. Thanks David.

          I would rather not share that video as it was only meant for friends..

          I will go to Australia for a short trip soon and don’t want to commit to anything until I come back.

          I am still in the hotel in Cebu City. Life is comfortable in the hotel too. So comfortable I don’t feel the need to rush off some where else. Just about everything I need is close by.

          I don’t imagine Derek will be interested in my lifestyle. But just in case I will explain it anyway. I pay P22,500 per month all up for a hotel room about 30 m² I think that is about 300 square foot. No more to pay except for food and entertainment. So some one cleans the room, it includes a 32 inch tv with 95 channels of cable, aircon, free internet, direct dial landline telephone with free calls to anywhere in Cebu, bathroom with instant hot water. It had 3 beds but i removed one and put in a small dining table instead. Nothing extra to pay for water or electric. Room service until 10pm. It is bigger than an apartment a friend was renting in an apartment complex and about the same size as many one bedroom apartments on offer in the city.

          The free internet is crap though which is why I got the GLOBE AT HOME box. In the morning it is usually running along at about 10 mbps. In peak afternoon it runs along at about 3mbps. And overnight, which is when an American working on line is likely to be working, I have seen speeds up to 42 mbps although a more typical speed might be high 20’s.

          I have 5 supermarkets within 200 yards. One operating 24/7. There is a jollibee across the road operating 24/7, there are 3 Mcdonalds within about 200 yards, one operating 24/7. There is a pizza hut and a starbucks 100 yards away. There are 3 7-11 stores within 200 yards, one operating 24/7. I have a multitude of cheap dining choices close by. There are several expat bars close by. There are several night clubs close by some with live bands. There are multiple massage outlets close by with massages starting at P250 per hour.

          So I pay P22,500 per month for accommodation then roll along on about P1000 per day after that which includes eating out for every meal, socialising with friends every day and having a daily massage whether it is from a masseuse or sitting in a massage chair for 30 minutes.

          My total costs all up for living, entertainment, travelling and immigration costs comes to about P60,000 per month.

          1. @ Jim Sibbick

            Hello Jim,

            Thanks again for contributing. And thanks for the detailed cost breakdowns. (don’t worry, I won’t share the video, although if you really want it private you should take it off Youtube, I just found it there vias a random search … I wasn’t stalking you, LoL). Your lifestyle there looks very, very comfortable for a single man or a couple.

            For my American readers, Jim’s total monthly costs in today’s US dollars work out for less than $1200, not too bad a deal at all for comfort and convenience.

            A lot of guys coming here for the first time spend a ton of time searching and searching for apartments or townhouses or condos to rent. Hard to do online, and it can easily result in finding a place that you later realize was a mistake … and now you’re stuck with it for a year or two.

            Many hotels will offer deals similar to what you have arranged there in Cebu. Better to move in, no costs for furniture and other incidentals and then learn your way around before looking for an apartment to rent or a condo to buy.

            Good luck on your upcoming trip sand hurry back. Be well.

  2. When we were in Metro Manila (Quezon City), for a 3 bedroom, 2 bathroom townhouse with our own parking slot, we paid roughly $300++. For Bobby who often got sick, living close to hospitals was a big plus. We had a choice of cheaper government hospitals (with government discounts for government employees and their families). There is also the more expensive St. Lukes.

    1. @ Claudette

      Thanks again for contributing. That was indeed a good price for the area you were living in. The values are out there, many people don’t realize that you just don’t find them by looking online. You have to “beat the streets”. 😉

      You affirm the point I often make. It’s great to talk about how cheap rentals might be far out in the provinces, but when you need to see a doctor you are then often stuck with a long and grueling trip back to the city.

      That’s why Mita and I like living where we do, just outside the Metro. Our little town is quite rural in many ways, but it’s only a one-jeep ride into QC, or 20 ton40 minutes in a car to very adequate medical care. People have to realize that you can’t predict the future need for medical care, you just have to plan for it … or suffer the consequences of poor planning.

      Another choice aside from St Lukes is The Medical City. In addition to their main hospital in Pasig, they have several satellite clinics (in SM North, for example) as well as an ultra-modern, well-staffed hospital in Angeles City.

      One can do quite well for medical care if you just don’t venture too far out in the bundocks.

      Be well

  3. Hello Dave

    This website is GOOD STUFF! I am going to make the move in about 6 months and usually stay in a BGC condo when i visit twice a year. The prices for long term have gone quite a bit up in the 5 years i been visiting. My question is HOW do you find the nice deal on a house or condo if not online? I would rather be next to a good hospital for the first year while I acclimate, but I rather not spend 40-50% of my budget on housing.

    I will be there again in a few months and would like to get setup for the move.

    Thanks.

    1. @ ExpatSoon

      Thanks for the kind words, and good luck with your next trip and your future plans.

      Good thinking in wanting to be somewhere close to a good hospital. So many folks come here to live and never think about health care. When I ask them they say, “Oh I’m not worried about that, I’m in good health”. Sell so was everyone who is sick or afflicted today, before they got sick, LoL. We none of us know what will happen in the future.

      BGC (Bonifacio Global City for those not familiar with our love for acronyms here in the Philipines) is a very high-end part of the Metro Manila region. It’s way outside my price range and the traffic makes it virtually outside my reach … I almost never visit there, sorry.

      I did look just now quick on AirBNB and I saw lots of reasonable listing in the Taguig/BGC area which might work for you. Give that a try. Godspeed.

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