A New Home Abroad
While many Americans choose to live out their retirement years in the same place they've always resided, an increasing number of adventurous folks opt to retire abroad, in search of new experiences, better climates, lower costs of living, or connections with familial heritages. The Philippines is one country where many are flocking to during their golden years.
- 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.
- Those who relocate may have their retirement benefits either mailed to them in the Philippines, deposited directly into a U.S. bank account, or deposited into another American financial institution of their choice.
- In general, foreigners are prohibited from owning land in the Philippines, but they can legally own residences, such as condominiums.
If you are eligible to receive Social Security benefits, you can continue collecting them while living in the Philippines, whether you're a citizen of the U.S. or a citizen of the Philippines. But 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. The Social Security Administration's (SSA) Payments Abroad Screening Tool can elucidate your specific situation.
You can choose to have your benefits mailed to you in the Philippines or deposited directly into a U.S. bank account or other U.S. financial institution of your choice. For many retirees, the direct deposit option eliminates the possibility of delayed, lost, or stolen checks, plus the money is delivered faster. The deposited money can then be withdrawn with ATM cards, and international money exchange services can be used to transfer larger sums when needed. Since Feb. 2018, the Philippines began participating in the Social Security Administration’s International Direct Deposit (IDD) program, allowing benefits to be sent directly to Filipino bank accounts.
Note that Medicare does not cover health services received outside the U.S. Although Medicare benefits are available if you return to the U.S., you'll be subject to a 10% higher premium for each 12-month period you could have been enrolled.
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 answer questions about Social Security, help you apply for benefits, or process post-entitlement issues like address changes or direct deposit enrollments. 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.
Foreigners are generally prohibited from owning land in the Philippines, but they can legally own homes. For this reason, it makes more sense to procure a condominium, which entails owning the house itself, but not the land, rather than seeking a traditional property, which involves owning both the structure and the land on which it sits.
The Philippine Condominium Act specifies that foreigners can own condo units, provided that Filipinos own at least 60% of the units in the building.
Option #1 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 #2 entails marrying a Filipino citizen and purchasing 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 cannot be transferred to you, but you’ll be given a reasonable time in which to sell the property and collect the proceeds. If you don't swiftly accomplish this, the property will automatically convey to your spouse's heirs.
Note that if you have dual citizenship in both the U.S. and the Philippines, you'll enjoy 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 farmland.
Citizenship and Visas
Nationality laws in the Philippines provide that you become a citizen if you were born in the country 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 obtain citizenship upon reaching the age of majority.
If you're a dual U.S./Philippines citizen, you can remain in the Philippines indefinitely. If you enter on your U.S. passport, or if you no longer have a Philippines passport, you can apply for a Special Resident Retiree's Visa (SRRV), which lets you live, work, and study in the Philippines. You may also 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, pension status, and type of visa. If you're at least 50 years old, and you 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 if you're collecting Social Security, 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.
Note that people typically pay taxes in both countries, but use offsetting tax credits to limit taxes to one. Because tax laws are complicated and ever-changing, a qualified tax accountant can help you achieve the most favorable treatment possible.
The Bottom Line
Anyone considering moving abroad during retirement must contend with collecting Social Security benefits while overseas, buying properties, and obtaining the correct visas. Like any nation, the Philippines has a range of rules and regulations that must be honored.
Note that 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 or your family in case of an emergency.