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Our 5 Year Philippines Retirement Plan Nears Completion

My asawa and I moved to the Philippines in July 2009. We had an unwritten five year plan before moving to “paradise.” We’re approaching the final phase of our retirement manifesto. In about one year from now, February 2014, every thing kicks into high gear. Our income will more than double. We’ll be buying property for our dream home in the Philippines then and in late 2014 we plan to move into our new residence in Iloilo City (the new house could look similar to the home depicted below.)

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The five year plan began April 2009. That’s when I retired after almost 30 years of working at telecommunications giant, AT&T, at the tender age of 57. That was officially Phase One.  My spouse will verify that I’ve not worked a day since. I have one chore that I do around the house: filling up the water barrels and buckets in our CR, Comfort Room, every Tuesday, Thursday and Saturday.  No running water at our enclave at Savannah Subdivision, though it was promised in March 2012. All we get are excuses from MIWD, Metro Iloilo Water District, which strictly adheres to Filipino Time.  You adapt. You have to if you want to survive as an American expat living in the Philippines. 

Phase Two of the plan involved selling our house in Auburn, Illinois (see next photo.)  Fortunately we sold our home in May 2009, less than one month after my retirement. Phase Three involved our actual move to the Philippines. My wife was firmly against moving back to Guimaras, her home province where she already had a lot and home that was paid for.

Our house in Auburn, IL

My wise asawa knew that there would be problems with relatives on the island coming over to the “rich kano’s” house looking for “loans” that would never be repaid. But I convinced her that if we were going to support her Mom and three nieces and a nephew that would be living with us, we needed to live in a place where we had no house payment.  We wavered from that part of the plan as we moved to our current rental home in Iloilo City in October 2012. But with rent for our three bedroom home at 140 US Dollars a month, we’re doing OK. 

Our house in Guimaras

Our house in Guimaras

Phase Four involved living in the Philippines until I reached the age of 62 in February 2014 and my Social Security kicked in.   So now I’m counting down each month before I make that trip to the Social Security office located at the U.S. Embassy in Manila. I can’t wait. Our income will more than double then. 

Six months after I start collecting my Social Security we will be able to access my retirement funds I invested from AT&T without an additional 10% tax penalty. We will then take out the necessary cash to buy three lots, totaling 1,000 square meters and build our dream home.  Our goal is finally in sight. 

Please bear with me for the next 12 months. You’ll be seeing more details on our search for our new property and the plans for our new home in the Philippines. I’ll try to be as detailed as possible for those who may plan to do the same. I won’t get into the debate on whether it’s better to rent or buy property in the Philippines. We will be fortunate to pay for everything in cash. No loans at the inflated interest rates here. No monthly mortgage payments. 

What about taxes? We’ll have to check that out. My asawa just paid her yearly tax bill in Guimaras for her home and 240 square meter lot. Since the property is located in what is considered a business district the taxes are higher. She sent our niece, Michelle, who lives with us, to pay it.  How much? P1,300 pesos for the year. Around 31 US Dollars. We should be able to handle the higher tax bill in Iloilo without any problem.  

It’s good to see the end in sight. We would not be able to retire as comfortably in the United States. And we would not be able to  build the house we’re planning to live in that we plan to have built in the Philippines. That’s the home we plan to live out our retirement years in.  I am indeed a fortunate man. I have good health.  Great surroundings. And most of all, a loving, supportive and beautiful Filipina wife.  And no snow to shovel, my Midwestern friends. 

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15 Responses to “Our 5 Year Philippines Retirement Plan Nears Completion”

  1. scott h says:

    Dont ya just love it when a plan comes together Dave? Great to see all the pieces come together for you. Building a house is also in our plan. In fact we are a bit ahead of you, We have just completed demolition of our old house and are waiting for the permits to start the construction of our “dream house”. All I can really say is, be ready for some suprises. :) In fact I owe you a short story on what I have “encountered” so far.

    • Dave says:

      We did encounter some problems when we had a new CR and roof built back in Guimaras, Scott h, when we first arrived. Our local power company would not send a tech out to install a special transformer so that a welder could be hooked up. The welding equipment would be used to install the metal roof. After over a month of delaying the project our contractor had to pay P1,000 to “expedite” the process. Someone was out the next day after the “expedite” fee was paid. Our permits cost over P15,000.

      Good luck on your build. Looking forward to hearing about your “adventure” so far.

  2. Owen says:

    Dave,
    Pardon the wet blanket, but suggest you folks put a serious pad in your projected budget because of possible/probable cuts to SS coming. I’d suggest planning for a 1.5x on income rather than 2.0.

    • Dave says:

      Owen, are you talking about a possible change in the cost of living formula for Social Security and perhaps Medicare? I don’t plan to apply for Medicare since my company’s retirement plan covers our medical costs at no monthly cost to us. Don’t know how much the possible cuts would hurt, but the basic amount I’m projected to get from Social Security will help us live a lot more comfortably in the Philippines.

  3. Anne says:

    hi dave,
    i know everything going smoothly especially with your help smart and beautiful wife i agreed to that. your lucky, looking forward this valentine’s day where you going to bring melinda as a reward beig a patience wife,wish papaduck here on valentine’s day. regards to your whole family.

    • Dave says:

      I’m planning to take Melinda out to a nice restaurant, Anne, for Valentine’s Day. She certainly deserves that and more. Next year PapaDuck will be with you on Valentine’s Day and I’m sure you’re looking forward to that.

  4. scott b says:

    i will be taking suzette out o VD day also.Do the restaurants here get packed on the night of? i dont want to end up at mang inasal.I have my favorite seafood restaurant i go to where its outdoors with a little pond and candles on the tables,i may go there,its by amigo hotel and sm delgado,cant remember the name,maybe annee knows it.

    • Dave says:

      We’ve never gone out on Valentine’s Day, Scott B., in the Philippines. Sounds like you’re going to some fancy joint. I don’t go by the Amigo that much so I don’t know what place you’re talking about. I was thinking of springing for a meal at Chow King, myself. 8O

  5. Owen says:

    Dave,

    The SS inflation adjustment proposal was tiny and was angrily attacked as vicious and horrible and amounted to less than $20 Billion / yr. Utterly trivial amount, wrt the problem’s magnitude.

    I suspect you know that delaying SS increases your benefit. In general, you have to live a long time on the higher benefit for the delay to make sense. I think,personally, you’re doing the right thing collecting ASAP because it may get cut much more than the formula change you mentioned, so “get it while you can” is wise.

    I’m mostly just suggesting you have a big budget pad, because at some point something ugly is going to happen. Greece is a good lesson. Folks thought they would never cut pensions because old people vote. They cut anyway. Eventually mathematics is stronger than votes, for all countries.

    • Dave says:

      I agree with you, Owen. I’m afraid to delay collecting Social Security at a later age though my monthly benefit will be reduced by taking it at age 62. I don’t trust our government and wouldn’t be surprised at anything they might do, even to seniors. Things are going to get much uglier at some point, I agree. I feel my asawa and I are better off financially by retiring in the Philippines. But that’s just our personal choice and decision. I’m hopeful that the United States can solve the debt crisis. Do I think they will? Nope, about as much chance of that as there is getting rid of corruption in the Philippines.

  6. PapaDuck says:

    Dave,
    So happy for you and Melinda that your dream house will come true next year. You earned it for all the years of hard work. We will start looking once i get there. We want one already built in a nice subdivision. Theres one that we really like, but a problem with the title and the people live in California. If they get it straightened out, we would probably get it. You have to really watch those titles when buying a house there. Anne is very smart with those, she knows what is going on. Once you get your SS you will be able to travel and do more things. Looking forward to your updates in the future about your house. Take care and stay safe

    • Dave says:

      Thanks, PapaDuck. And problems with titles and property ownership is a HUGE problem in the Philippines. People will sell lots to others with false title documents. Also, property disputes, even between family members, can lead to someone getting murdered. This occurs on a fairly regular basis in the Philippines. A person really needs to check out the title property ownership thoroughly before buying any property here.

      Good luck on your future home and hope the title problem can get worked out. Glad to hear that Anne is savvy about that issue.

      We’re looking forward to traveling more and plan to visit you (and Anne, of course) and make a trip to Palawan to visit Melinda’s family there. Also a trip to GenSan will be possible then to visit with faithful reader, Tom Ramberg. I’m sure we will be including Scott H in our future travel plans, also.

  7. Owen says:

    Dave,

    It is good to see you thoroughly aware of the risks unfolding to SS. Another suggestion: if you do manage a budget pad, let it grow in the Phils rather than the US. Spreading money around is a good idea. The overwhelming size of the numbers is just so dangerous that getting money out of the US cannot be anything but wise.

    • Dave says:

      What’s that old cliche, Owen? Don’t put all your eggs in one basket? Yep, good idea. We have accounts in the Philippines and the States. Once I can tap into my IRA next year, we’ll be transferring a lot of our funds from the States to the Philippines. Good advice, thanks.

  8. PapaDuck says:

    Owen,
    I have to agree with you. You can get a decent interest rate on a Time Deposit in the banks there.

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