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Savings Necessary to retire at 55
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If I were to retire in the Philippines, how much money would I need? I would want to retire at 55 and will not have any debts.
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Like anything else in life, it depends on how many people you are supporting and what part of the country. Big city, touristy, and ritzy/trendy is going to run you more than living in a low-key smaller provincial city or low-key rural area. When it was just my wife and I, we lived a simple but comfortable life in 2017 on 25000 – 30000 pesos ($500–600 USD) a month while living in a semi-rural swath of rice and fruit farms between a city with a population of roughly 300,000 people and the smaller provincial capital. We were a 3–4 hour bus trip away from Manila, so (from my perspective as a Northeastern American) our situation was analogous to avoiding the high cost of living in New York City by living in Albany or Scranton where it is cheap and easy to hop on a Megabus whenever you crave big city action. By “comfortable,” I mean that we lived with good wifi, bucket showers, only occasional AC use, and only using tricycles and our motorbike when traveling around the greater Cabanatuan-Palayan City Metro Area in Nueva Ecija Province. These trips into town were on a weekly basis and consisted of visiting an SM Mall to get non-perishable groceries and any classroom/office supplies I needed, walk and window shop in the AC, and treat ourselves to Jollibee or Mang Inasal. Other than that we cooked at home with occasional purchases from puto and noodle vendors in our barangay, and my wife and stepson got meat and any vegetables we couldn’t grow ourselves by going to the city wet market at 4 in the morning and haggling. We passed most of our free time at home, where we managed my wife’s family guava farm, hosted visiting relatives, gardened in the yard, and played with our dogs Sweetie, Fleeky and Freaky (R.I.P.). I also remember spending hours (but not a single peso) next to the fan on my laptop as I updated a blog my family back home was following, taught myself basic html and web development skills, and read blogs and amused myself reading commentary on that twisted train wreck known as the Trump Administration. Securing a position as a part-time online English tutor with a virtual school based in China generated enough income to cover day to day expenses mentioned above along with domestic land-based travel around Luzon Island. During the 9 months that I spent working from our provincial farmhouse while waiting for my wife to get cleared for coming home to the USA with me, we managed to avoid dipping into savings when paying bus fare and four nights in mid-range hotels when touring Baguio City and visiting my in-laws in her hometown barangay in Baler, Aurora. There are some additional expenses that a part-time online income of $600/month will not cover. If you are going to the Philippines, whether it is to enjoy the single life or live with a significant other. If you are flying solo, you will have to pay around 2,000 pesos to extend your visa-free stay for a second month. To stay more than 2 months, you have to spend something like 6,000 or 7,000 pesos to get an alien residency card and extend for another month or two. Don’t remember the details and exact costs, but they can easily be searched for online. Long story short, you can get a round-trip ticket to either Hong Kong, Macao, Taipei or Kota Kinabalu for the same cost as navigating the red tape in Manila, so you may as well travel and reset your stay when you come back. If you are really trying to save money, I recommend Kota Kinabalu. It is dirt cheap since it is not as developed as the other 3 cities I mentioned, but I found it to be walkable, safe, and clean when I visited. It is also an amazing place for seafood and nature lovers, and Malaysians are generally just as proficient in English as Filipinos. Just remember that you will have a bit of culture shock entering an introverted Muslim country after 2 months in an extroverted Catholic society. I occasionally had to ask officials and vendors to speak more loudly when traveling in Malaysia, but people there are generally friendly and laid back enough to make communication and taking care of business easy. If you are married, you can arrive visa-free and then take your spouse on a quick jaunt to a nearby country where he or she can get in visa-free (again, Malaysia is the best option if you don’t have the dough to hustle around Hong Kong). Remember to bring your marriage certificate, because when you return to the Philippines and show it to the immigration officer, you will get a Balikbayan Stamp for a 1-year stay for, get this, zero pesos! Although you avoid most of the visa and alien residency costs when you are married, you have to remember that Filipino culture is much more family oriented than Western cultures, so if you have income you will be expected to cover birthday parties (which are elaborate events in the Philippines, especially for kids) and chip in for in-law’s wedding and funeral costs. If you are working on immigration paperwork with plans to bring your spouse home, you also have to consider the cost of trips to Manila (or presumably Cebu for those living in the south, but I don’t have expertise in the Visayas and Mindanao) because the Filipino Government makes citizens jump through a lot of hoops for the privilege of moving abroad. I’m assuming this is a jobs creation program for paper pushers, or at least it was back in 2017–2018. Perhaps the COVID-19 pandemic may have finally forced Filipino bureaucrats to shift paperwork processes from waiting in long lines to hand someone a form downtown to filling the form online, but please comment on my answer to share any emigration-related updates as I don’t know this for sure. We covered some of the family and immigration related expenses with income from my wife’s family farm, where we could pick guavas every other day and harvest a half-hectare of rice twice a year. However, don’t be like me and dive into rural Filipino life with the romantic fantasy that you can live off the land sustainably. I found out the hard way that farm income in the Philippines is unreliable due to fluctuating crop prices. Sometimes we would trade 20 kilos of guavas for 1,000 pesos (enough for a couple to feed themselves for the 2 days until the next harvest), but then there were those days where we picked over 100 kilos yet only netted 500 pesos after paying the hired pickers (which was not a huge expense). If you are in the northern Philippines like I was, typhoons will inevitably wipe out farm cash flow for a month or two. This can happen anywhere from 1 to 3 times a year, and it will only get worse as climate change progresses. Whether your in-laws have a farm or not, I highly suggest securing back-up sources of income to supplement savings and wages from online work. I lucked out and was able to cash out my bitcoin at the peak of the December 2017 bubble to pay for the family Christmas, a couple grandkids’ birthdays, and traveling and transitioning back to Maryland with my wife. This was solely because I bought and used bitcoin to make online purchases and saved my crypto change to speculate, and the spare change ballooned to thousands. If you want to risk the cryptocurrency game and buy low and sell high, that is up to you. However, if I were to attempt to live the simple life on the Nueva Ecija farm while practicing English with kids online for a few hours a week again, I would hustle in America for a couple years first, save $20,000 – $40,000, and park that money in high-yield dividend stocks. Do your research and look for REITs and other companies that have a stable stock price history and no history of dividend cuts. If you do this homework and choose the most reliable stocks with an average 8% yield, you would have around an extra $125–250 a month to cover unexpected expenses and fulfill your duties to your inlaws. I’ll close this answer with an insider tip for native English speakers who are living in the Philippines or playing with the idea of becoming an Pinoy expat. If you apply with virtual Chinese schools, you will have a leg up on the competition because China is in the same time zone as the Philippines. That means managers won’t have to worry about you not showing up for a class because you messed up when calculating the time difference between Baltimore and Beijing.
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At 55 you have to consider that you are potentially going to have another 35 to 45 years on the planet. How much you need depends on the lifestyle you desire. Only you can decide that. To start the ball rolling you can utterly ignore all the Yootoobers sitting in a beach restaurant with a cocktail or enjoying adventure sports and saying that they can live off USD 700 per month. This is BS. The next tranche of Yootoobers pick the next round number of USD 1,000 per month. This is also BS. Based on my experience you need at least USD 1,500 per month to live a decent and interesting lifestyle. But you will not be heading up to skybars on a daily basis for a cocktail or two with a woman to enjoy the city views. Now, I do know a lot of expats who live on around that much. But I do not consider their lifestyle is something to be envied. After a while the same beach is boring, the same location is boring, the same partner is boring; and they will admit it if you take a few beers around and talk to them. A large number sit on the internet all day, or get a beer and stare into the distance thinking about their past. Which fills in the time nicely. But a year later you wonder WTF have I achieved? Is this all there is??? Some guys thought they could play golf everyday. Until they found out that it costs at least USD 50–70 per day So that would have been almost USD 2,000 per month just to play golf. Or they felt that a retirement meant visiting the bars and girls. Until that ended up costing the same or more than the golf would have cost. Plan on USD 100 per day minimum for a fun bar night. I don’t know any retirees who can afford to do that. I reckon you need about USD 3,000 minimum per month when averaged over the year, which includes a bit of fun, some travelling and living decently. Or tone it down, no women or golf and live off USD 1,500 minimum. Add on another USD 700 if you want a permanent live-in. So USD 2,200 per month. At 55 I would say you need at least USD 750,000 generating income of USD 30,000 plus per year after tax and then try to live off USD 2,000 per month or less, reinvesting the remainder to allow for inflation and problems along the way. The fact you even mentioned debts is strange. Don’t even consider retirement if you have debts.