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

October 21, 2018 — 12:05 AM EDT

More and more people are choosing to retire abroad to enjoy 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 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

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; live on $1,200 a month and your savings would last 14 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.  

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.

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.

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.

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.

Note: Because of continued violence, certain areas in the Philippines should be avoided. On April 13, 2018, the U.S. Department of State issued a Travel Advisory that cautions travelers to "exercise increased caution in the Philippines due to crime, terrorism, civil unrest and a measles outbreak," adding that travelers should not travel to The Sulu Archipelago, including the southern Sulu Sea, "due to crime, terrorism, and civil unrest" or Marawi City in Mindanao "due to terrorism and civil unrest." It also urges travelers to reconsider visiting other areas of Mindanao. 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.