Benefits And Caveats Of Retiring In The Philippines
by Edwin Quinabo
Philippine President Ferdinand “Bongbong” Marcos Jr. not only is inviting first, second, third generation Filipino-Americans to visit their ancestral homeland to bolster the tourism sector, he’s also calling on Filipino-Americans to come home to retire in the Philippines.
“It’s my hope that some of you will come home for good and retire in a much better Philippines… a Philippines with better roads, better airports, better internet, better governance. That is my dream. And that’s why that is what my administration is working for,” Marcos Jr. said in May 2023, at a presser while meeting with the Filipino community in Washington, D.C. after his bilateral meeting with U.S. President Joe Biden.
Government incentivizing expat retirement in the Philippines
The Philippine government has been welcoming of foreign nationals to retire there for decades and has a government agency called the Philippine Retirement Authority (PRA) whose sole mission is to promote the Philippines as a retirement haven. The PRA was established by Bongbong’s father President Ferdinand Marcos in 1985.
Last month Yahoo Finance named the Philippines as one of four countries that offers the most incentives to retire there. It listed the Philippines’ Special Resident Retiree’s Visa (SRRV) as one of the incentives that is among the most flexible visas in the world for foreigner-retirees. The SRRV allows exits and entry into the country as many times as desired (and with exemptions from airport transit charges). It offers retirees the right to stay indefinitely without the need for constant renewals. SRRV holders are regarded as permanent residents of the Philippines.
Through the PRA retired expats receive senior citizen discounts. The government offers expat retirees a waiver of import duties and taxes on up to $7,000 of personal items.
Foreign government pensions such as Social Security, 401(k), individual retirement account (IRA) or other types of retirement plans and annuities are also exempt from taxation in the Philippines.
Foreign retirees can buy property (condos and townhouses), open businesses and is only taxed on income that’s generated in the Philippines.
Number of foreign retirees in the Philippines
The PRA says there are an estimated 75,000 retirees from more than 150 countries in the SRRV program. But that doesn’t account for the total population of expats (there are other visas) in the Philippines which some estimate at 200,000.
The U.S. State Department’s most recent records as of February 2023, show almost 300,000. U.S. citizens residing in the Philippines include many U.S. military veterans. How popular a destination is the Philippines for U.S. veterans? Manila is home to the only Veterans Administration regional office outside of the U.S. to serve that large population. The actual number of retirees out of that 300,000 was not provided.
Developers meeting retirees’ real estate needs
Philippine developers report many of their buyers are foreigners, mostly Filipino-Americans who have strong ties to the country as former Philippine citizens or active investors. “At least 50% of our condo sales” are to Filipinos living in the U.S., John M. Reyna, assistant vice president for Robinsons Land Corp, told the Wall Street Journal. Some buyers are strictly investors. Some are investing in property as their future retirement home.
Developers say new developments in Ayala. Makati, Taguig and Quezon City are convenient for retirees because they’ve been designed to have stores that sell necessities, shopping malls and entertainment all in walking or nearby distance.
Many of the newer immigrants from the Philippines residing in Hawaii are a part of this real estate boom. Hawaii’s Filipino immigrants typically will invest in property in the hometowns they came from or in Manila with the aim of possibly retiring there.
Roland Casamina, President/CEO of House of Finance on Oahu, told the Filipino Chronicle that some in Hawaii’s Filipino community have homes in the Philippines while they rent in Hawaii. He said, “we [in Filipino community will] fix our home in the Philippines while we struggle to pay rent here in Hawaii. For many who do this, they have one of the best houses in their hometown in the Philippines yet continue to pay rent in Hawaii.”
New era for Philippines as a retirement destination
The post-pandemic era – with high inflation in as many years the pandemic (critical part) ended and counting — could make the Philippines even more attractive to retirees on a tight budget. For retirees who choose to continue to work out of need or preference, the new distance-work culture makes retiring in the Philippines viable. Most places in the Philippines have reliable internet access, expat retirees say.
Requirements for SRRV visa
But retiring in the Philippines takes planning and shouldn’t be done on a whim. Experts recommend that future expat retirees consult with their financial advisor and set aside money incrementally before making a move. There are also requirements to meet.
To obtain an SRRV, applicants must be:
*at least 50 years old
*Deposit at least $10,000 into a Philippines bank if you have guaranteed monthly income (covers you and two dependents)
*Deposit $15,000 for each additional dependent
*Have proof of pension that pays at least $800 a month ($1,000 for couples). Social Security benefits could meet the pension requirement.
*The one-time visa application fee is $1,400 for the head of household, plus $300 for each additional family member. (visit pra.gov.ph for full details.)
So why are Americans moving to the Philippines to retire? What’s so attractive about it and on the flipside, what are the caveats?
More affordable cost of living
For the same reason Hawaii residents find themselves priced out of the state and are moving to the U.S. mainland – the Philippines is yet another option where the cost of living is more affordable than Hawaii.
Philippine officials estimate the U.S. dollar has three times the value in the Philippines and that it’s possible to live comfortably on $2,500 a month. Compare that to the overall retirement estimate cost in the U.S. at about $3,800 a month.
In rural parts of the Philippines, a couple can live well for $1,140 a month; while in the big city, it gets closer to $2,500. International Living, a magazine that extensively covers the costs of residing in different countries, reports that most expats can live comfortably with $1,000 to $2,200 a month.
Numbeo, a major database of economic conditions in different countries, compared the Philippines and the U.S. in terms of specific costs, as of March 2022. It found:
*Rent Prices: 77.95% lower than in the U.S.
*Consumer prices with rent: 58.64% lower than in U.S.
*Restaurant meal prices: 70.99% lower than in U.S
*Grocery prices: 47.71% lower than in U.S.
For some retirees, moving to the mainland, to parts where it’s desirable with a vibrant Filipino community, that too could be too expensive with the little savings accrued over their working years. International Living’s Global Retirement Index estimates Americans should have about $200,000 in savings to retire comfortably in the Philippines. GOBankingRates estimates retirees who plan to live in the U.S. should have a nest egg of $300,000 to $400,000 in pre-retirement savings.
More than half of U.S. workers must work past the age of 65, and many have no plans to retire at all, researchers say.
For those Filipinos who fall into this category, the option of retiring in the Philippines is like buying a ticket to retirement that otherwise would not be possible in Hawaii or the mainland.
Returning to one’s ancestral and cultural heritage, a place where retirees have social capital
For some Filipino Americans, they say retiring there was never a second or third option, but the plan all along. Going back to the Philippines to them is a homecoming, the country they grew up in, the familiar, the place where they feel they truly belong.
Carolyn Weygan-Hildebrand, born and raised in Baguio, Cordillera region, but has been living in Hawaii for many years, said, “every now and then, one meets those who have retired there. They are usually the ones who have stronger ties or those who’ve contributed to making life better there. For example, someone who sent young people to school or helped to own property or start a business. In other words, they have social capital.”
Weygan-Hildebrand said she hasn’t given much thought into retiring in the Philippines. “I will consider it if I can remain healthy and not be a burden to anyone for a long time.
“When I see retirees in Honolulu, I see in them some of the things that I want to do. That is, actively learning new things, volunteering in areas that they like, and finding support and opportunities.”
Weygan-Hildegrand said she would retire in the Cordillera region or a similar place if she were to return to the Philippines in her golden years. “It is home and so there is culture-compatibility with folks and the environment. There’s so much to explore there yet also,” she said.
Safety
Most Americans who travel to the Philippines talk about how safe the Philippines is contrary to what’s reported on the media. But there is actual data to support that the Philippines is not as safe as most people think who’ve been there but had never encountered incidences that compromised their safety. Experts say there are areas in the Philippines that are safer than others. The same holds true for most countries including the U.S.
According to the Institute for Economics and Peace’s Global Peace Index — which ranks the nations of the world based on criteria like violent crime, internal conflict, homicides, access to weapons, political instability, violent demonstrations, terrorist activity, the population of imprisoned people, safety and security, and militarization – the Philippines ranked 125 in most secure nations. But it ranked ahead of the U.S. which landed in the 129th spot.
Experts recommend retirees do laser focused research in the areas of interest and to talk to locals there.
One source for information on a wide range of topics from health insurance, moving and shipping, real estate firms and listings, relocation companies, expat banking, among others is www.expatexchange.com. Expats share their stories in forums – what it’s like to live in specific cities or provinces, their experiences in moving and transitioning to local customs.
Natural beauty, stable weather, diversity in lifestyle – city or country living
Seniors tend to find extreme weather from very cold to hot less tolerable than in their younger years. The Philippines tropical weather – that can get too hot in the summer – is at least closer to Hawaii than most parts of the mainland with extreme weather conditions.
The Philippines countryside is abundant in pristine world-class beaches, lush valleys and verdant rolling hills and mountains – places that calm the senses and enhance feelings of serenity that seniors in particular find value in, having had already transitioned from the hustle-and-bustle of work life to retired, relaxed mode.
Expat retirees can island hop to some of the most beautiful places on the planet. Palawan was ranked as the no. 1 best island in the world in 2016 by a poll from readers of US travel magazine, Conde Nast.
For seniors wanting a more vibrant social life, there is the option to live or frequently visit its various cities. The Philippines has some of the most modern and entertainment-rich cities in all of Asia. Filipino Americans who haven’t been back for a long time would be in awe at developments in areas like Makati City, frequent visitors say. Some of the most futuristic buildings in the world, like the G.T. International Tower, is in Makati City. Metro Manila’s skyline rivals the best anywhere, locals say.
The major drawbacks of Philippine city life are air pollution, excessive traffic, and in some cities, high crime and slums.
Insufficient infrastructure, traveling difficulties
Living in newer planned developments in the city addresses some of the concerns retirees have in moving to the Philippines. Some areas in the countryside – while serene and beautiful – could lack sufficient infrastructure that could mean frequent power outages and water stoppages (shortage), and outdated communications.
Insufficient infrastructure also means less amenities and easy access to necessities. Retirees would need to spend more time, money and energy traveling to the nearest bank, store or entertainment center.
Philippine health care standard is below U.S. standard
Living in a well-planned and designed city like Makati also addresses access to quality and quick health care. In some areas in the countryside, the nearest adequate medical facility could take valuable time to get to. And in health emergencies, this could be a matter of life and death.
For healthy retirees, health care is not as critical. As far as cost, even if Medicare is not accepted in the Philippines, health care still works out to be more affordable there than in the U.S. For those with chronic or serious health conditions and needing frequent health care, expat retirees can buy local health insurance. What Americans must remember is medical procedures must be paid up front in most cases except in rare cases like at a U.S. veterans health facility.
Hawaii resident Raymund Llanes Liongson, PhD, born in Manila, grew up in Laoag City, Ilocos Norte, said health care in the U.S. is preferred over the Philippines and is one reason why he wouldn’t retire there. “Health care is a big consideration in deciding where to retire. Especially for those with health issues, this is a critical factor to consider. Health care is more advanced here. This is particularly so when it comes to emergency responses. A 911 call would summon a response team — ambulance or fire department — in minutes. I am not sure if such a quick response can be matched in the Philippines especially if you are in the province or a small town.”
Closer to family
For many retirees the strongest consideration of where to retire depends on family, where their immediate family lives. Retirement destination is usually decided upon as a family. It doesn’t mean parents and children must live in the same city or state, but that traveling to get to each other should be quick and easy, retirees say.
This could be why most Hawaii retirees either stay put or go to the mainland as the second option.
“If there is anything that is influencing my thinking right now, it would be mobility and transportation on various levels. I do not know how others [who retire in the Philippines] do it when their closest relatives (e.g., children) live here in the US. It is not like a plane rife to Kona or San Francisco only,” Weygan-Hildebrand said.
For Liongson, he said, “All the members of my family are here — my wife, daughters, and even my brother, and sister. They are the ultimate reason, in addition to health care, that I’d prefer to spend most of my retirement life in Hawaii.”
For Filipino Americans and immigrants accustomed to living in the U.S. for decades, some expats who’ve made the leap to retire in the Philippines say the Philippines in many areas from technology to modern services and amenities have caught up to the U.S. It really depends on where you decide to settle, they say.
