Why Americans Are Not Retiring In Philippines

[JJReyes]

Except for those with affinity to the Philippines through national origin or marriage, few Americans are retiring in the Philippines. The article below was prepared for possible discussion during the 2nd Philippine Retirement & Healthcare Summit on April 24th. After registration as a delegate; sending payment; purchasing a ticket; and reserving hotel accommodations, I received an email that the Summit has been rescheduled to June 26th. Too late for me to cancel. I decided to proceed with the visit, arriving on April 22nd and departing on April 29th. Due to a scheduling conflict, I won't be able to attend the Summit on June 26th. ***********Why Americans are not retiring in Philippines By J.J. Reyes According to a study quoted by the Wall Street Journal, 42% of America's 77 million baby boomers plan to relocate after retirement. Warm climate migration to the Sunbelt region, which includes the South and Southwest states, is part of an American tradition. Approximately 7% of baby boomers are also considering retirement abroad. U.S. News & World Report has started an annual ranking of the best places for baby boomers to retire overseas. Unfortunately, Philippines is not included in the list. Most popular countries for Americans include Mexico, Costa Rica, Panama, Ecuador and Uruguay. All offer lifestyles where $1,000 to $2,500 a month enables a retiree to live well. Choices include beach or mountain, city or rural. You can reside in a gated resort or become part of the local community. Weather is warm; the culture is interesting; and the people are friendly. Philippines can make similar claims. What is the reason for the limited number of American retirees? Philippines has a 21 days visa waiver program, soon to be extended to 30. Mexico is 180; Costa Rica is 90; Panama is 180; Ecuador is 90; and Uruguay is 90. The significance of 90 days or more is American retirees from colder regions like to fly to warmer areas during the winter months. They are collectively known as, "Snowbirds." If they enjoy their winter holiday, American Snowbirds buy properties to make it an annual event or they may even consider permanent relocation. No one will commit to permanent relocation in a foreign country without research, familiarization and a high comfort level. A 90 days visit, also known as a long stay program, is an important first step. Buying a vacation home is another. While there is a non-stock, non-profit organization promoting Long Stay Philippines, it would be difficult for the organization to create attractive packages for Snowbirds if their visit is limited to 21 or 30 days. The most popular retirement destination is Mexico with over one million Americans. A visa is not required for the border zone, an area roughly 20 kilometers into Mexico from the U.S. border, most of Baja California, and the Sonora "free zone." An FMT (Forma Migratoria de Turista) visa is needed for all other areas. At a border crossing, the FMT fee is approximately $20 depending on the exchange rate. For passengers arriving by air, the fee is already included in the price of the ticket. The FMT can be valid for a maximum of 180 days. You need to inform the immigration officer how long you plan to stay. To obtain a new one, many Americans simply leave Mexico for a few days and apply for another FMT upon re-entry. Once the American retiree is ready to relocate to Mexico, the requirement is an FM3 visa, a category permitting a stay in the country of up to one year. The FM3 can be renewed four times in increments of one year. The initial application fee is approximately $150. Each renewal period is about $100. The FM3, which is issued in the form of a photo identity card, is needed to open bank accounts; register a car; obtain a driver's license; buy or lease a home. Philippines already has a highly successful one year visa waiver program called, "Balikbayan." Unfortunately, the privilege is limited to persons who can prove Filipino ancestry. Should the same privilege be extended to American retirees, the number of visitors to Philippines will significantly increase. Extending the Balikbayan privilege to those who are not of Filipino ancestry could include the payment of a reasonable fee. American baby boomers are retiring at the statistical rate of 10,000 per day. Immediately in front of them are another 30 million retired Americans. The average 2012 Social Security benefit is $1,240. Add pensions from either a defined benefit plan or defined contribution plan (401k, IRA, SEP-IRA, Roth-IRA, etc.), the average American retiree receives $2,900 a month. The market potential is huge. If Philippines is seriously interested in this market, the government needs to develop a new visa strategy.

[earthdome]

A couple more things to consider for why few americans are retiring to the Philippines:All of the countries south of the border are close to the same time zone as the US.Travel is much less expensive going south than half way across the world.I see the Philippines as being attractive for permanent relocation. It provides a less expensive starting point to explore other parts of asia.Travel is too expensive for most snowbirds to visit during the US winter.

[billten]

And IMO most importantly, there is that ugly sticking point that you can't own land here...

[JJReyes]

A couple more things to consider for why few americans are retiring to the Philippines: All of the countries south of the border are close to the same time zone as the US. Travel is much less expensive going south than half way across the world. I see the Philippines as being attractive for permanent relocation. It provides a less expensive starting point to explore other parts of asia. Travel is too expensive for most snowbirds to visit during the US winter.

I did air travel time calculations between two cities as part of my on-going research. Yes. The proximity to the United States is a contributing factor why South of the border is more popular. My colleague and associate in Bangkok offered a counter argument. Thailand attracts a lot of European and American retirees. There is a retirement community north of Chaing Mai with more than 3,000 retirees from the Netherlands. Amsterdam to Bangkok is 11 hours, 25 minutes. For the German retirees, who are all over Thailand, Frankfurt to Bangkok is 12 hours, 22 minutes. Japan and South Korea have winters that can be mild to severe. Their Snowbirds go to Malaysia, Thailand and the United States. Malaysia has a 90 days visa waiver. Thailand has a 30 days visa waiver, except South Koreans can stay 90 days. Last year, Thailand experimented with a 90 days visa waiver for Japanese visitors. The United States has reciprocal 90 days visa waiver agreements with 34 countries including Japan and South Korea. This is one reason why affluent Japanese and South Koreans winter in Hawaii, California, Nevada and Arizona.It is difficult to imagine anyone relocating to the Philippines unless they have visited several times. In my opinion, to make an informed decision requires a stay of more than two or three weeks.I have not come across any studies regarding the effect of airfares as a cost component for warm climate migration by Americans and Canadian Snowbirds.Kindly note that I appreciate the comments. My plan is to retire in about a year to start a new business of providing overseas retirement care in the Philippines for American seniors who need assisted living and acute care. This forum has been very helpful in plugging some of the holes in my business planning.

[JJReyes]

And IMO most importantly, there is that ugly sticking point that you can't own land here...

American retirees were informed they could purchase land and build homes in Mexico. Then the Mexican Supreme Court issued a ruling that land ownership is limited to citizens of Mexico. Property values dropped. Some retirees even lost their homes when the original owners returned to reclaim their property. The current system in Mexico for American retirees is leasehold. I believe you can also lease land in the Philippines.

[i am bob]

Hey JJR!I agree that the Visa length is one of the major factors keeping people from coming. But do you want to know another reason? It's really simple and Niagara Falls is just learning why it has been slowly missing out as well... Advertising!!! Until I became involved with the forum, I have not heard more than 1 person out of a thousand speaking about the Philippines - and I have never heard or seen any advertising on TV, radio, print, banners in any travel agencies, any banners on any web pages to drive me crazy, nothing, nix, nada!!! If people don't hear about the place, it's like it doesn't exist - and if it doesn't exist, nobody is going to consider going there!!! Sure the new advertising for the Philippines is out - doesn't mean it's being heard or seen! And I get advertising from mostly 2 different markets - Toronto, Ontario, Canada and Buffalo, NY - I am half way between the 2! So bottom line - they need to make the Visa long enough to make a difference and they have got to spend more on advertising so people will know there "is such a place"!

[JJReyes]

I agree that the Visa length is one of the major factors keeping people from coming. But do you want to know another reason? It's really simple and Niagara Falls is just learning why it has been slowly missing out as well... Advertising!!!

Hi Bob,You hit it on the nail. There is very little advertising about the Philippines and the overall international image is not very positive. If you visit the Philippine Consulate in Honolulu and request for brochures about Boracay, they hand you a black & white sheet listing the names of several hotels. I requested for the Philippine Retirement Authority information packet and the clerk did not seem to know what it was. She did smile and reply, "Out of stock."There are hundreds of websites promoting retirement abroad. Unless you include "Philippines" as part of the search engine words, Philippine retirement websites seldom appear among the top 20 or 50. It's a pity because in my opinion the Philippines has more to offer than other more popular retirement destinations.

[Mike S]

In the few years that i have lived here there are very few American couples (not of Philippine descent) living here .... a few missionaries couples but not any others that I have seen .... and there are lots of reasons why .... not just the visa issue that everyone keeps harping on ..... it doesn't take to long to look around you to figure out why an elderly man and his wife would not or could not live here ..... what are your static figures pointing to as far as single males vs. married males with their wives ..... dropping the visa or other requirements with out drastically changing the infrastructure of the Philippines is NOT going to bring elderly people here in droves ..... a poster above it it right on the head when he said the proximity to the US is Mexico's biggest advantage ..... not a 24 hour trip by plane ..... I also did a study of Thailand before I moved here and although there are a ton of foreign males visiting there or moving there to meet their future wives I found very little evidence of married couples moving there except for holiday ......Having lived in Florida for 40 some years I can tell you with out a doubt that the Philippines will not ever be the destination of thousands of retired COUPLES ...... first and foremost there is NO handicapped facilities of any kind ... just as a starter and secondly I listened to their bitching and complaints about living conditions when the came to Florida for 3 months and how much better it was up north as compared to living down south in the provinces ...... just wait until they visit the REAL provinces here in the Philippines ...... I would give anything to be a mouse in the corner on the plane ride back to hear their tales about their adventures in paradise ...... But I admire your tenacity ..... everyone should have a dream and something to strive for ......

Edited April 2, 2012 by Mike S

[i am bob]

I listened to their bitching and complaints about living conditions when the came to Florida for 3 months and how much better it was up north as compared to living down south in the provinces .....

That's funny Mike! They say the same thing but in reverse when they come to Niagara Falls! "It's so much better back down south in our own country..." That was the woman from Buffalo - couldn't get her to realize that home was a 15 minute drive on the highway but she did have the south part right! :no: :cheersty:

[OnMyWay]

JJR,Thank you again for your ongoing insights into retirement in Phils and other topics! I really appreciate the time you put into your research, writing and other activities involving Phils!Another key point is, and I think you have written about this, the lack of a competitive retirement visa plan. I was reviewing the SRRV again and I don't really see any large benefit for the retiree.The only reason it is still on the plate for me is that I thought I had read that the SRRV would allow an unmarried retiree to bring in household goods (as in a whole container, not BB boxes) as duty free. However, I can't find anything official on that. Do you know where I might find more information on that aspect?