“I think I’ll move to the Philippines!”
We at Down Under Visa hear that from our clients all the time. We hear it a lot more lately. The recent Visa Application Charge increases for partner visas has spurred a few to say this, and maybe a few more are thinking about it. But is it a realistic proposition for the average Australian, especially those who are thinking about retirement?
Can you live like this?
We live in the Philippines as you probably know. It will be 5 years full time in a few days. And if you ask us if we regret it? No, we don’t. Not at all. Yes, we miss a few things, but still have no plans on returning. However we’re slightly different to most, and we definitely haven’t retired. I’m not playing golf on this Sunday morning. I’m working! And whilst we charge a fairly modest professional fee compared to most, we still cater to Aussies and are not running a sari-sari store!
The point I’m making is that we do OK. We earn like Aussies, yet we are Aussie expats in the Philippines. Aussie Dollars stretch fairly well here, and we live comfortably. But not all are in that same position, and many see the Philippines as a place to escape from their troubles and woes, and most think they will live much better here.
What’s the main issue? Money!
Everyone who comes to the Philippines in holiday-mode notices that a lot of things are cheap here. Taxi rides are cheap. You can ride in a jeepney for a very low cost. The dentist is cheap. Meat at the local market is cheap. And locals here live on very low salaries, and somehow they survive. Surely Aussies in the Philippines can do the same thing?
You can. Of course you can. Check with Centrelink if you’re planning on bringing an Aussie pension overseas. I can’t tell you about that, and I know the rules keep changing. But let’s look at two scenarios:
Fixed Income
Fixed-income = pension, superannuation or investments of some sort. You have a certain amount of money to spend each week, and that’s basically it. If you have to dig into your savings, obviously that idea has a shelf-life. Eventually it runs out.
What problems? I suppose the main issue is to underestimate costs and expenses.
If you’re sitting there in Australia listening to economic woes on the TV, you start thinking about how good it would be to live in the Philippines and to live the easy life without worrying about increasing prices. You do some sums and you list down what you think your expenses will be, and you subtract this from your income. Looks pretty good! However, what can go wrong?
Firstly, an enthusiasm-based budget is invariably an unrealistic one. You leave things out that you’ll need. You don’t include anything unexpected. You make no allowances for prices going up. And you assume you will be happy with local standards. But once you start adding some imported food items, starting wanting to run the air conditioner more often, and want a few more comforts like you had back in Australia, that budget can be blown out of the water.
Secondly, you forget exchange rate fluctuations. Have a look at the chart below of the last 10 years!
The last 10 years of exchange rates
At 1:45, $500.00 = P22,500.00. At 1:33, $500.00 = P16,500. 26% decrease in the value of your Aussie Dollar! It will happen, and you have to be prepared for it.
Doing business in the Philippines?
Many get this idea. They will set up a business and deal with the locals. Plenty of people here. Why not? I won’t elaborate here. Please read a previous BLOG article HERE
Real ex-pat life for Australians in the Philippines
People come here on holidays. They meet the lady who showers you with affection. The family are nice to you and treat you like a pop star. It’s new. It’s exciting. You go to resorts. You watch sunsets over the ocean. You don’t need to go to work. You are in a state of bliss, and you think you could well and truly handle this. Life in paradise!
But that’s holiday-mode, and real life is not always like that. This is accentuated if you don’t have as much to spend as you thought you would.
Most ex-pats here do it far tougher than they imagined they would have! There! I’ve said it! I know more struggling ex-pats than I know those who are doing well.
Many came here with money in the bank and assets back home, only to see them dwindle away. Some got their fingers burnt by women who weren’t as sincere as they thought they were. Some made dumb business investments. Some let the relatives with their hands out get out of control. They basically didn’t watch their spending, and things got out of hand.
And many overestimated their spending power here. The bills were more than they thought they would be. Exchange rate fluctuations bit hard. Or their ideas of making money as an English tutor or as a writer of BLOG articles or as some sort of internet entrepreneur didn’t pay as well as they thought it would. Or the call-centre job didn’t pay very much either.
The point I’m trying to make is that you should try to be totally realistic before you make that big step and start selling up and burning your bridges! It will not be like it was on holidays. Staying here for 2 – 3 weeks at a time is not the same as living here year after year. Rent your house in Australia out and live here for 12 months before you do anything rash. There’s a chance you won’t like it and won’t be able to make it, and will be beating a hasty retreat back. Make sure you are still able to!
You do NOT want to be stuck here if you’re not happy! You do NOT want to live here like a poor person. You really don’t. The locals can live with power cuts, with bathing in cold water, with public transport, with a diet that’s OK if you only weigh 40 kg, and with standing in long queues for everything. They can live with noise, with thousands of neighbours around them, with no air conditioning, and with a lack of luxuries that you consider to be normal. And they can cope remarkably well with a lack of the safety-nets like Medicare, bulk-billing doctors, and a Centrelink office that never lets you hit rock-bottom. Can you cope like that? And would you really want to?
Do your sums realistically. Don’t see the Philippines as your escape from something. Don’t make unrealistic business plans. And don’t burn your bridges. Make sure you can go back if you need to.
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Yes, Very true Jeff.
I lived in Davao for 18months and yes I loved it.
As for living in the Philippines permanently, Well I’d just like to add a few things here.
From personal experience , I can tell you;
For one, as a pensioner, on the age pension, at the moment, Centrelink will give you six months offshore and then your pension will be cut off completely. However Centrelink DOES have a scaling down system. Six weeks away full pension, no problem. After that you will start losing a percentage, I think from memory, between six and twelve weeks you will lose about $60 per week, (This is for a single Aged Pension). After Twelve weeks, it will start scaling down per fortnightly period, until at six months, cut off completely.
The other issue is medical.
If you are unfortunate enough to get sick and need hospital treatment, then BEWARE, that can cost you literally heaps. While I was there in davao, I got a load of dengi fever. I was in hospital for about one week. Let me just say that the Filipino Doctors and Medical staff, in the Philippines are second to none. Based on my experience They are fantastic, very very professional and mostly as good as you would get in Australia.
That hospital stay cost me 100,000 php.
Hope this is some benefit to some of you.
Cheers
Ian
Thank you Ian. Very useful feedback!
No Probs Mate,
Just another little thing, if i may.
Regarding getting involved, in business with the locals.
I’m not about to knock the Pinoy people here for one minute. I have many many good Filipino friends in the Phils . And for that matter, to me, they are mostly some of the best people, i have ever had the pleasure of meeting, in my entire life.
But BEWARE AGAIN. I have had some good foreigner friends there in the past. Many of which have gotten extremely burnt. Most Filipinos are not silly, they are very, very smart people and if they can make a peso out of you—, then they WILL.
Here is just one story. One of my Kiwi friends while living in Mindanao , joined forces with his Filipino friend and they invested in a Palm Oil plantation. The Pinoy friend owned the land. My friend spent heaps of money on infrastructure, only to see almost NO return. Guess who made all the money from it. My Kiwi friend finally went broke and returned to New Zealand.
Ian
The Centerlink 6 month rule depends. on the amount of time you lived in Australia as an Australian resident. The 6 month rule is for foreigners who did njot live and work in Australia for the prescribed period. http://www.humanservices.gov.au/customer/enablers/centrelink/age-pension/age-pension-while-travelling-outside-australia
Hi
Yes true if you have lived and worked in Australia most of your life you keep the pension
And true you do loose medical and the safety net barrier
There are lots of pros and cons to moving there for retirement
Cheers
Ian
Definitely, Ian. But better to tread carefully. Too many assume the holiday will go on and on.
AN Australian born and bred , the way I get treated at age 86, I believe my best move would be to the Philippines to Aklan where we would live a more comfortable life, my wife was born in Aklan so we have family and friends there ho would be there for us, I may not live long there but am sure I would die much happier than the way I get treated in the land of my birth, thanks to the multi millionaire Prime Ministers who are in politics for their own good, not mine, I first lived in Manila in 1977 and have been there many times since so know what I am doing
Hope it all goes well for you, George
Hi Pete,
Yes you are correct.
Too much to list all the variables HERE, though mate
Ian
Hi guys..very interesting ..thanks for your sharing….regarding the Pension info…Does the Military Service Pension have restrictions also..? Maybe I will check with DVA when I get back to Oz…cheers Harry
Retired military pensions and disability pensions from DVA will not be touched as they have been earns. You can live anywhere forever and they will still be paid fortnightly. You can have them paid into an overseas account monthly if you prefer. Hope this info helps.
Thanks for sharing your valuable experiences guys…does anyone know if the Service Pension has any restrictions etc..? Maybe I will check with DVA when I get back to Oz next month…cheers Harry
Hi john here i was looking at retiring in the phillippines my wife will have a pension but i wont but i would like to know bring our personal items the cost of this can you help thank you
What personal items are you talking about, John? Furniture, etc, I couldn’t tell you as I never did it myself. We brought all of our items here (clothes, etc) by balikbayan boxes. Any Filipino store in Australia will have an arrangement with a shipper.
I was born in Australia, living and working there my whole life.
Now I am an aged pensioner living in the Philippines permanently since 2014.
I have had no problems with receiving the pension. Deposited into my Australian bank account like clockwork.
What might happen to my elegibility if I return to Oz for a couple of weeks.
Couldn’t tell you, sorry Douglas. You need to contact Centrelink. It’s not my area.
Hi im Australian been on disability pension for 18yrs wanting to live in the Philippines for good what happens to my disability pension im 52
Wouldn’t have a clue, sorry. You’d have to ask Centrelink about that.