Monday, August 31, 2015

Second Thoughts About Retiring in the Philippines

A few years ago, with hopes of retiring early, I started to explore the possibilities of doing so in the Philippines due to the lower cost of living in that country. There were townhomes with two bedrooms in good areas that were selling for as little as $15,000, with three bedrooms costing not too much more. Fast forward about five years later and those same townhomes are now selling at more than double the original prices.

One of the places I considered was Zamboanga City to be close to my mother, however she has passed away since. I also wanted to live there to have closer access to SATTI, hahaha! I still have plenty of relatives and friends in that city but there are problems with electricity and an ongoing turmoil with certain groups trying to take over the area.

Another place I checked out was Cagayan de Oro city, but I hardly know anyone there other than a cousin and an elementary school classmate who said that area was much more peaceful than Zamboanga. Other property values I’ve looked into were in Davao and Cebu.

Currently, a main consideration is to live close to my brother in Quezon City since he is my only immediate family left. Checking properties for sale near his location showed prices ranging from 1.4 million Philippine pesos for a tiny bachelor’s pad condominium all the way to 3 million to combine 2 bachelor’s pads into one, or a one bedroom place. There’s no way I could afford those prices if I wanted to pay for the whole amount all at once. I just paid off my mortgage in the U.S. and I’m not ready to start another one in another country. The only way I could afford to buy a decent home in the Philippines is if I sell my condo here in the U.S., then move to the Philippines. Mentally and financially, I’m not ready to do that. By the way, I am qualified to buy property in the Philippines because I have dual citizenship.

It has often been suggested that before packing everything up and moving, one should try living in the area you want to move to for a couple of months or more to see if you would like it. It would not be possible for me to be off work for a couple of months but it may be possible to visit a week or two every couple of years. In fact instead of retiring in the Philippines as a backup plan, staying where I am now will be the backup plan since my mortgage is already paid off. That takes early retirement off the table though since I won’t qualify for Medicare until I’m 65 (I’m currently 58). If medical insurance was not a consideration, I would be able to retire when I’m 60 and use my retirement plans until I need to collect from Social Security. Medicaid (Medi-Cal in California) could be a possibility except when I die, California has to be reimbursed for whatever expenses they used on me from my assets, before any heirs get to collect their share.

There remain other options or sacrifices if I still want to retire in the Philippines, and that is to buy a home in the suburbs, if you can call it that. Two to three bedroom townhomes in Bulacan and some parts of Cavite remain affordable but they are much farther away from my relatives in the Metro Manila area. However, I may have to buy it now or else they may no longer be affordable in a couple of years.

Another consideration with moving is having to buy a vehicle and getting a driver’s license. It would also be a major adjustment in learning how to drive in the Philippines which I hear has a lot more traffic jams nowadays and driving techniques are way more different than what I’m used to in California.

Let’s also not forget that if I buy a home there, there are start up costs of new furniture, appliances, and utilities.

As far as health insurance, since I’m a dual citizen, I will be able to avail of Philhealth, the universal health insurance of the country, although I will have to pay a certain amount up front to catch up since I have never contributed to the system.

Yet another possibility would be to rent out my condo if I decide to move to the Philippines, become a remote landlord, and use the money to pay for the new mortgage, but that would entail hiring a property management company to maintain the condo, which would decrease my proceeds.

It is due to the recent economic successes in the Philippines that property values and the cost of living have spiked, even though the poorer Filipinos have not seemed to have fared better due to this.

And then there's the politics of the country…

Oh my goodness, how can I neglect to say that one of the most positive things I can say about possibly retiring in the Philippines is the hospitality of the people. 

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