Retire In The Philippines With $200,000 Of Savings?

[FlyAway]

Interesting article from investopedia.

 

http://www.investopedia.com/articles/personal-finance/031815/retire-philippines-200000-savings.asp?partner=YahooSA

 

More and more people are choosing to retire abroad to enjoy a better climate, new experiences, access to 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 Ocean 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 the 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. (see Retirement: U.S. Vs. Abroad). Here, we take a quick look to see if it’s possible to retire in the Philippines with $200,000 in savings.

A Genuinely 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 2015 Index, the Philippines scored 92 out of 100 for cost of living, placing it in the top 10 for cost of living, and matching Belize, Cambodia, Ecuador, Guatemala and Thailand. Only Nicaragua and Vietnam ranked higher for low cost of living, each earning a perfect score of 100.

International Living also shows that most expats can live comfortably in the Philippines for about $800 to $1,200 a month. Some basic math shows that if you live on $800 per month – probably the lowest amount for 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 is, of course, a basic example that assumes your monthly expenses stay exactly the same over the years, and that you have no other income or expenses (e.g., tax liabilities) during retirement.

Add In 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 $1,328 per month for 2015.

Just adding Social Security into the mix, makes retiring comfortably in the Philippines with $200,000 start to seem like a very real possibility. Your monthly benefit alone 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.

Rent or Buy?

Like anywhere in the world, what you pay for rent in the Philippines depends on the location, size and condition of the property. According to city and country database website numbeo.com, the average monthly rent for a one-bedroom apartment in a city center is $228.94; outside a city center the rent drops to an average of $124.77 per month. For three-bedroom properties, average rent is $394.53 (inside the city) and $240.59 (outside the city).

 

While rent is generally considered affordable, if you plan on living in the Philippines for awhile, buying a condominium might be a more cost-effective option. 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?

Tips for 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 that many new expats make is acting – and spending – like they’re still on vacation. While it’s normal to splurge on vacation, spending too much on meals, attractions and the like on a long-term basis can quickly burn through your retirement budget.

One way to avoid overspending is to find out where the locals shop 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). You probably know where to find the best deals and which places to avoid because they are overpriced. Do the same thing abroad and your money can last much longer.

The Bottom Line

The uncertainty of anyone's lifespan makes it impossible to predict if $200,000 alone would be enough to last through retirement anywhere – even in a country with a low cost of living such as the Philippines. What is clear is that living abroad during retirement can offer a better quality of life for your money and enable you to 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.

Note: Because of continued violence, certain areas in the Philippines should be avoided. On Nov. 20, 2014, the U.S. Department of State issued a travel warning for the Philippines – in particular the Sulu Archipelago, the island of Mindanao and the southern Sulu Sea area. Other areas in the Philippines are generally considered as safe as other places in Southeast Asia.

U.S. citizens traveling to or residing in the Philippines are encouraged to enroll in the Department of State’s Smart Traveler Enrollment Program (STEP), which provides security updates and makes it easier for the nearest U.S. embassy or consulate to contact you in case of an emergency.

 

[mogo51]

Interesting article from investopedia.

 

http://www.investopedia.com/articles/personal-finance/031815/retire-philippines-200000-savings.asp?partner=YahooSA

 

More and more people are choosing to retire abroad to enjoy a better climate, new experiences, access to 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 Ocean 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 the 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. (see Retirement: U.S. Vs. Abroad). Here, we take a quick look to see if it’s possible to retire in the Philippines with $200,000 in savings.

A Genuinely 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 2015 Index, the Philippines scored 92 out of 100 for cost of living, placing it in the top 10 for cost of living, and matching Belize, Cambodia, Ecuador, Guatemala and Thailand. Only Nicaragua and Vietnam ranked higher for low cost of living, each earning a perfect score of 100.

International Living also shows that most expats can live comfortably in the Philippines for about $800 to $1,200 a month. Some basic math shows that if you live on $800 per month – probably the lowest amount for 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 is, of course, a basic example that assumes your monthly expenses stay exactly the same over the years, and that you have no other income or expenses (e.g., tax liabilities) during retirement.

Add In 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 $1,328 per month for 2015.

Just adding Social Security into the mix, makes retiring comfortably in the Philippines with $200,000 start to seem like a very real possibility. Your monthly benefit alone 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.

Rent or Buy?

Like anywhere in the world, what you pay for rent in the Philippines depends on the location, size and condition of the property. According to city and country database website numbeo.com, the average monthly rent for a one-bedroom apartment in a city center is $228.94; outside a city center the rent drops to an average of $124.77 per month. For three-bedroom properties, average rent is $394.53 (inside the city) and $240.59 (outside the city).

 

While rent is generally considered affordable, if you plan on living in the Philippines for awhile, buying a condominium might be a more cost-effective option. 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?

Tips for 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 that many new expats make is acting – and spending – like they’re still on vacation. While it’s normal to splurge on vacation, spending too much on meals, attractions and the like on a long-term basis can quickly burn through your retirement budget.

One way to avoid overspending is to find out where the locals shop 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). You probably know where to find the best deals and which places to avoid because they are overpriced. Do the same thing abroad and your money can last much longer.

The Bottom Line

The uncertainty of anyone's lifespan makes it impossible to predict if $200,000 alone would be enough to last through retirement anywhere – even in a country with a low cost of living such as the Philippines. What is clear is that living abroad during retirement can offer a better quality of life for your money and enable you to 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.

Note: Because of continued violence, certain areas in the Philippines should be avoided. On Nov. 20, 2014, the U.S. Department of State issued a travel warning for the Philippines – in particular the Sulu Archipelago, the island of Mindanao and the southern Sulu Sea area. Other areas in the Philippines are generally considered as safe as other places in Southeast Asia.

U.S. citizens traveling to or residing in the Philippines are encouraged to enroll in the Department of State’s Smart Traveler Enrollment Program (STEP), which provides security updates and makes it easier for the nearest U.S. embassy or consulate to contact you in case of an emergency.

interesting article, but having lived in Thailand for 6 years, would not like to try and do so on $800 a month.

You might exist, but certainly not live as I regard living. Otherwise you might as well go back to your native

country and join the soup kitchen line every day! Certainly even $1200 would be the absolute minimum and the costs

of the two countries are very similar.

[Tukaram (Tim)]

I know very few people that have $200K at retirement.  If that was a requirement then none of us would have retired here  :)

[Dave Hounddriver]

I know very few people that have $200K at retirement.  If that was a requirement then none of us would have retired here

 

In contrast, I know of dozens who retired here on about 500K in a savings plan in lieu of a retirement fund.  Some are doing quite well with that, others have done poorly with their investments and are struggling.  Unfortunately, I was one of the latter.

Edited March 19, 2015 by Dave Hounddriver

[Dave Hounddriver]

 Unfortunately, I was one of the latter.

 

So how good is that figure of 200,00K in the title of this thread?  Here is my story on 2 1/2 times that amount:

 

Retiring with a $500,000 savings account.  Will it work for me?

 

I’m an idiot.  I know I am because most of my friends tell me that.  They wonder how I could retire with $500,000 in the bank and not have money now.  I am going to tell you about that so you can learn how not to be an idiot.

 

On May 1, 2008 I retired with 500K in my account and moved to the Philippines a happy man.  I planned to live on $2,000 a month so I kept the first year’s money in an easily accessible account and kept an additional 10K for moving expenses.  Then I put 10% (50K) in a high risk growth account and the remaining money I invested with my broker.  He is a well-respected broker who had been earning 8 to 10% consistently for the people I knew who gave me a referral.  His firm is highly ranked as a safe investment company.  I invested 416K with his firm.

 

Then came the world crisis of late 2008.  By early 2009 I had lost all my my high risk investments and 30% of my main portfolio.  I still needed to live so I withdrew 24K that year and that left a balance of 266K in my savings account.  Still not bad right?  This broker had been earning 10% per year for my friends so at 10% I could still live on 26K per year.

 

5 years go by.  My savings account never sees a 10% annual return, in fact it is only making about 1% per year.  That’s nothing.  With 5 x 24 = 120K coming out, my saving are now down to 146K.  Now I realize the chance of living off the interest is done for so I split the 146K into 10 and realize I can survive 10 years at $1,000 a month and still have a little left over.  It can be done, right?

 

And then the Canadian dollar falls to 33 pesos.  End of story.  Your mileage may vary.

 

 

EDIT:  To show the other side, I have a friend/neighbor who retired 1 year after me with 500K and a small pension.  He was NOT hit by the world crisis and he managed his own money in the stock market and got lucky.  He is doing extremely well with that amount.  Again, your mileage will vary.

Edited March 19, 2015 by Dave Hounddriver

[stevewool]

 

 Unfortunately, I was one of the latter.

 

So how good is that figure of 200,00K in the title of this thread?  Here is my story on 2 1/2 times that amount:

 

Retiring with a $500,000 savings account.  Will it work for me?

 

I’m an idiot.  I know I am because most of my friends tell me that.  They wonder how I could retire with $500,000 in the bank and not have money now.  I am going to tell you about that so you can learn how not to be an idiot.

 

On May 1, 2008 I retired with 500K in my account and moved to the Philippines a happy man.  I planned to live on $2,000 a month so I kept the first year’s money in an easily accessible account and kept an additional 10K for moving expenses.  Then I put 10% (50K) in a high risk growth account and the remaining money I invested with my broker.  He is a well-respected broker who had been earning 8 to 10% consistently for the people I knew who gave me a referral.  His firm is highly ranked as a safe investment company.  I invested 416K with his firm.

 

Then came the world crisis of late 2008.  By early 2009 I had lost all my my high risk investments and 30% of my main portfolio.  I still needed to live so I withdrew 24K that year and that left a balance of 266K in my savings account.  Still not bad right?  This broker had been earning 10% per year for my friends so at 10% I could still live on 26K per year.

 

5 years go by.  My savings account never sees a 10% annual return, in fact it is only making about 1% per year.  That’s nothing.  With 5 x 24 = 120K coming out, my saving are now down to 146K.  Now I realize the chance of living off the interest is done for so I split the 146K into 10 and realize I can survive 10 years at $1,000 a month and still have a little left over.  It can be done, right?

 

And then the Canadian dollar falls to 33 pesos.  End of story.  Your mileage may vary.

 

 

EDIT:  To show the other side, I have a friend/neighbor who retired 1 year after me with 500K and a small pension.  He was NOT hit by the world crisis and he managed his own money in the stock market and got lucky.  He is doing extremely well with that amount.  Again, your mileage will vary.

 

Thankyou for sharing this, this should help many people who are trying to make future plans

[jpbago]

I don't want to click the "Like" button to DH's post, even though it shows what can and does happen. I think that it really happens to many people. One of my friends took his pension out in a lump sum instead of monthly payments and now he is broke and back working. He invested in some lots that were supposed to be sub-divided and built on but it never happened.

If interest rates were higher, like 8 or 10%, I might buy a life annuity with a 10 year guarantee. Looking back, a $500K annuity would pay out $2500 per month for the rest of your life. No stress!

 

P.S. Don't even think that online poker will make up the difference.

[stevewool]

We are all different in what we are wanting in our life and how we are going to acheave that too,

Having a large sum for the future must be very good to those who have it, at the moment i am working towards that, and also having a monthly income coming in too and do not forget your state pension, wow i could be rich if i live long enough,

Right here is my plan,

I have one investment and its doing ok it is called a collective retirement fund, i put a set amount in there and i took 25% out and in the five years its been in its made over the 25% and yes thats good but i have invested nothing else in there since the day it went in,

I will have income from a house here in England, or i will sell it, either way i will have £100,000 or £400 a month over say 20 years,

Two small pensions which i can take now, say around £250 a month,

Remember i cannot take my state pension for another 9 years, so what i will have for a income has to suffice us till that day,

I know i have enough cash and we also have our own home in the Phils too all paid for,

So what am i going to do with all this cash,

Lots of it is in ISAs putting in £15000 per year tax free has helped me plan for our future,

I know we can manage on around £300 to £400 per month and the rest of the money will be put away in savings accounts, you may say you are not making any money from that , and you are correct but i know i am not losing any either,

All the money we have will out last me and my wife and thats doing the things we want to do, its knowing what you want without being greedy, yes things might change, who knows, but at this moment for me i think its right

[Kuya John]

and the rest of the money will be put away in savings accounts, you may say you are not making any money from that , and you are correct but i know i am not losing any either,

Steve

Sounds like your a pretty sensible guy, however eg: even at to 2% interest per year, with inflation at 2;1/2 per year, your losing money.

Go the Philippines and you will see inflation higher in some circumstances!

Not forgetting being British, health insurance is a big question too.

Retirement age is rising here in UK also, before you are able to get your pension, although there is now plans to allow you to take your pension in one lump sum.

Good luck with whatever decision you come to...JB

[virginprune]

You can take out private and work place pensions in a lump sum but not the state pension. This is a good thing as then the state pension is something to always fall back on. It is worth getting a pension forecast because then you will know if you have paid enough in to receive the full amount. Which gives you the opportunity to top up if need be.