While many Americans choose to age in place – that is, remain where they lived prior to retirement – a small but increasing number of adventurous older adults move abroad during their retirement years. Some want to enjoy new experiences, a better climate or the possibility of a lower cost of living. Others want to explore their heritage: to live in a country where they were born, or where their parents came from. Let's take a look at what is involved when returning to one's roots means retiring abroad – specifically, to the Philippines.
If you are eligible to receive Social Security benefits, you can continue collecting them while living in the Philippines – whether you are a citizen of the U.S. or the Philippines (special rules may apply if you are not a U.S. citizen and if you receive benefits as a dependent or survivor of a worker). Use the Social Security Administration (SSA)’s Payments Abroad Screening Tool for details pertaining to your specific situation.
You can choose to have your benefits mailed to you in the Philippines, or deposited directly into U.S. bank account or other financial institution of your choice in the U.S. For many retirees, the direct deposit option makes the most sense since you don’t have to be concerned about delayed, lost or stolen checks, plus you get your money faster. Once your benefits are deposited, you can make regular withdrawals using your ATM card, or use an international money exchange service to transfer larger sums when needed. Even better: As of February 2018, the Philippines started participating in the Social Security Administration’s International Direct Deposit (IDD) program, meaning you can have your benefits sent directly to a Filipino bank account. See Expats: Opening A Bank Account in the Philippines.
Note that Medicare does not cover health services you receive outside the U.S. Medicare benefits are available if you return to the U.S., but you will end up paying a 10% higher premium for each 12-month period you could have been enrolled but were not.
If you need assistance with your federal benefits, the U.S. Embassy Manila hosts the offices of the SSA, as well as the U.S. Department of Veterans Affairs (USDVA). The SSA office can assist with (among other things) answering questions about Social Security, processing post-entitlement issues (e.g., change of address, direct deposit enrollment, missing checks) and applying for benefits. For information, call (632) 301-2000, ext. 9, or email FBU.Manila@ssa.gov. The USDVA office can assist with processing benefit claims, local payment of benefit checks, and other services. For information, call (632) 550-3888.
In general, foreigners are prohibited from owning land in the Philippines, but they can legally own a residence. Option #1 is to buy a condominium. With traditional property, you own the structure as well as the land on which it sits. With a condo, you only own the unit itself – and not the land. The Philippine Condominium Act specifies that foreigners can own condo units provided that at least 60% of the units in the building are owned by Filipinos.
Option #2 is to buy a house on leased land. Even though you can’t own the land beneath the house, you can buy the house itself. Under the Investor’s Lease Act of the Philippines, a foreign national can enter into a lease agreement with a Filipino landowner for a long-term lease of 50 years, with a one-time 25-year renewal option.
Option #3 is to marry a Filipino citizen and purchase the property in your spouse’s name. While your name won’t be on the title, it can be added to the contract to buy the property. If you legally separate from your spouse – or if your spouse passes away – the land can’t be transferred to you (as a foreigner, you are still prohibited from owning land), but you’ll be given a “reasonable” amount of time to sell the property and collect the proceeds. If you don’t accomplish this in a reasonable time period, the property will automatically convey to your spouse’s heirs and/or relatives.
Note that if you have dual citizenship in both the U.S. and the Philippines, you have the same ownership rights as a Filipino citizen. If you are a native-born Filipino who is a naturalized citizen of another country, you can buy and register land in your own name, but you will be limited to 1,000 square meters of residential land or one hectare (about 2.5 acres) of agricultural or farm land.
Citizenship and Visas
Nationality laws in the Philippines provided that you become a citizen of the Philippines by birth if you were born in the Philippines or if at least one parent was a Filipino citizen at the time of your birth. Children born before Jan. 17, 1973, to a Filipino mother can elect citizenship upon reaching the age of majority.
If you have dual citizenship (with the U.S.) and enter the Philippines as a Filipino citizen, you can remain in the country indefinitely. If you enter on your U.S. passport – or for some reason no longer have a Philippines passport – you can apply for a Special Resident Retiree’s Visa (SRRV), which allows you to live, work and study in the Philippines, travel outside the Philippines and re-enter anytime.
To be eligible for the SRRV, you’ll need a minimum visa deposit, which varies depending on your age, your pension status and the type of visa you have: If you are 50+ years of age and apply for the SRRV “Classic,” you must deposit $10,000 in a local bank if you have a pension of at least: $800/month for a single applicant, $1,000/month with your spouse (Social Security counts), or $20,000 if you don’t have a pension. If you are between the ages of 35 and 49, the visa deposit jumps to $50,000.
If you are considered a resident of the Philippines, you will be taxed on your worldwide income; non-residents are taxed only on Philippines-sourced income. Because the U.S. and Philippines have an income tax treaty in place, you generally won’t pay taxes twice on the same income (people typically pay taxes in both countries, but use offsetting tax credits to limit taxes to one). Tax laws are complicated and change frequently, so it is recommended that you work with a qualified tax accountant to make sure you achieve the most favorable treatment possible.
The Bottom Line
Anyone considering moving abroad during retirement has to sort out things like collecting Social Security benefits while overseas, buying property and making sure he or she obtains the correct visa to remain in the country. Like any nation, the Philippines has specific rules and regulations: Some aspects of establishing a life there are straightforward, others may seem less so. For more thoughts on the subject, see Retiring In The Philippines: Pros & Cons.
Note: U.S. citizens traveling or living abroad 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 and/or your family in case of an emergency.