RT Cunningham

Retirement in the Philippines – Retired American Military Members

I receive a lot of messages on Facebook, Google Plus and by e-mail from retired American military members about retirement in the Philippines.

Rather than answering them individually, I now point them to this article.

These are the answers I have today. My answers could be different in a year or so.

My Retirement in the Philippines

I married my wife, Josie, in 1985. She was born in Tacloban City and spent her preteen years living there. Her family migrated to Olongapo City in the 1970s. In 1988, while I was stationed in Okinawa, she bought the property my mother-in-law and some of our other relatives live on today. In 2005, we bought the property that our house now resides on, which is right next door.

I never planned for a retirement in the Philippines. Well, at least not until 2027. Circumstances turned in my favor when the housing boom occurred and we cashed out months before the collapse. After I made my decision in 2005 and started planning, I learned what I needed to know to actually make the move. We didn’t sell the house until 2006.

Josie took an oath at the Philippine Consulate in Los Angeles to become a dual-citizen because she became a naturalized American citizen before the Philippine Repatriation Act of 2003 was passed. When she did that, my younger son, who was born in the United States before Josie became an American citizen, automatically became a dual-citizen.

When I was preparing to make the move, I found out I needed a physical examination and a copy of my local police records to take with me. I went to the Philippine Consulate again and obtained a one-year non-immigrant visa. Upon arrival in the Philippines, I was directed to go to the Bureau of Quarantine before going to the Bureau of Immigration to do what I needed to do there.

While I was in Los Angeles, I opened a United States dollar account at a Philippine National Bank branch. They opened the account in Olongapo City for me. I’m sure I could have chosen some other place, but I had no need to do so.

There is some more up-to-date information on the “Thinking of Moving Here?” page for the Retired Activities Office (RAO), Subic Bay, Philippines. While I can only mention my situation with a Filipino spouse, they have information available for retirees in other categories.

Now it’s time for questions and answers. I’ll do my best to be honest and correct.

What state can I claim as my legal residence for tax purposes?

This is an easy question to answer, but it’s frustrating. If you no longer live in the United States, why do you have to pay taxes to any state at all? After all, aren’t you paying federal taxes on your United States-based income?

Like active duty military members, you can claim any state by showing residence or intent to live there, the primary being actual presence in the state. Other things, like registering to vote in a particular state, can also show your wish to keep that state as your state of legal residence.

In essence, as a retiree living outside of the United States, your state of legal residence (for tax purposes) should be the state you would return to — to visit relatives, set up businesses (like LLCs), etc. You just need to be able to convince your previous state (if any) that you now live in the new state.

Can I deduct anything for my taxes?

The rules don’t change just because you’ve left the country. You can still claim yourself, your dependents, etc. The only confusing parts happen when you try to answer questions in the tax program that don’t really pertain to your situation.

An example is when it asks if your dependents lived with you in the United States. Well, since you don’t live in the United States, how can you answer that question? You have to pretend you’re living in the United States, but only for that part of the taxes.

When I do my taxes, I spend hours converting pesos from receipts into dollars. It’s better to write it down as you go, but I tend to be lazy. If you file a business (schedule C), you can deduct the same things you could in the United States, except for office space (and you probably won’t have that anyway).

Start a blog and try to make money with it and call that your business. That’s what I do and I do make money. Since my business is on the Internet, I deduct everything that I pay for that’s related to the Internet, including my Skype subscription.

What about medical insurance like TriCare?

I honestly don’t know which hospitals honor United States-based medical insurance. I’m sure there are one or two, but I don’t have medical insurance and I’ve never been to a doctor or a hospital in the Philippines.

Frankly, unless you’re in really bad health (in which case, you shouldn’t move to the Philippines anyway), I think you’re better off paying as you go. I had three nieces go to a doctor in the same month and the total cost of all three visits, including medicine, was less than a month’s premium for TriCare.

Medical care and prescription medicine is big business in the United States (and the main cause of the problems with American health insurance). That isn’t the case in the Philippines.

Nevertheless, there are local health insurance companies. In the long run, getting health insurance based in the Philippines is probably your best bet. When I return to the Philippines, both me and my wife will be enrolled in PhilHealth.

What about dental insurance like Delta?

My wife had fillings put into five teeth. The total cost was less than 5000 pesos. I think it came out to almost exactly USD $100. The upper denture that I paid for only cost me 7000 pesos. When I had my upper teeth pulled, it cost me 400 pesos (less than $10) per tooth.

The cost of getting average dental work done is less than the premiums and the deductible amounts for most American dental insurance plans. I had my teeth cleaned for 1000 pesos. That’s like USD $30.

What about medicine and medical supplies?

Nearly all the medicine available in the United States is available somewhere in the Philippines. I can’t get into specifics because I don’t have any experience with specifics. If nowhere else, whatever you need can be found in metro Manila.

A lot of drugs that are prescription drugs in the United States are sold over-the-counter in the Philippines. For example, Amoxicillin is an over-the-counter antibiotic that requires a prescription in the United States. I don’t think any of the antibiotics in the Philippines specifically need a prescription even when prescribed by doctors.

Just like in the United States, doctors in the Philippines will prescribe over-the-counter medicine when that is all that’s needed. That’s one of the reasons I haven’t been to a doctor in the Philippines. The one time that I can remember needing antibiotics, I just bought them from the local drug store.

What banking choices do I have? Are there American banks in the Philippines?

As far as I know, there are a couple of American banks in metro Manila, but their services are very limited – not the kind of bank you and I would deal with. Two banks in the Philippines (that I’ve heard about) seem to have some agreements with American banks: Bank of the Philippines Islands (BPI) and Banco de Oro (BDO).

I have two bank accounts. I receive my pension in a dollar account at Philippine National Bank (a direct deposit that is really a remittance because they deduct $7 per deposit). I also receive my Google AdSense payments in that account.

I have a peso account at UnionBank of the Philippines because it’s tied to my PayPal Philippines account. I have a peso debit card and I pay my web hosting with it. I have to manually deposit pesos in that bank, but only when my PayPal income isn’t enough to cover expenses.

What is the best mobile phone to use and what’s the mobile phone service like?

As long as your mobile phone has a SIM card, you can get service with it. I have no experience with good mobile phone service. In the suburbs, like where I live, voice calls using any mobile phone service is horrible and even texting isn’t reliable. People in the city areas have it better.

Should I buy a laptop and bring it with me or should I buy it there? What about Wi-Fi?

Up until I found a new computer store, I would have said to buy it in the United States and bring it with you. An automatic voltage regular is all that’s needed to convert from 220v to 110v and they can be had for 600 pesos or less.

That’s no longer the case. The laptops at that store are comparable in prices to those in the United States, although the choices are limited. The major brands are available, so it’s really whatever you want to do.

As far as WiFi goes, it’s not very good. My sister-in-law subscribed to WiFi Internet (Globe Broadband) and would be without a signal for days at a time. She now has DSL. I can honestly say the best choice for Internet, if you can afford it, is PLDT DSL (I spend 3000 pesos per month for 3 megabits).

What’s the water like, for drinking and bathing? What about hot water?

If you drink tap water, you’re going to get sick eventually. Just like in the United States, people drink bottled water when they can afford it. It’s not any more expensive here than it is there. I get about 30 gallons delivered periodically for 200 pesos (around $5.00 USD) and I have a water dispenser.

No, hot water is still not the norm. Most people still take cold showers. Only certain people, like me, have tied hot water heaters into our water supplies. I like hot showers even when it’s hot.

Is there a VA hospital in Manila, near the American Embassy?

There’s a Manila Outpatient Clinic for a specific group of veterans. I can’t tell you any more than what that I found online. I heard rumors, and nothing more, that a full-fledged VA hospital was going to be built, but that was a few years ago.

Are there flights into and out of the Cubi airport at the Subic Bay Freeport Zone?

There are, but they’re only commercial cargo flights. Some airlines are now flying in and out of the old Clark Air Base (airport code CRK), but I don’t know which ones other than Asiana. Philippine Airlines was supposed to move there in 2010, but didn’t. From what I’ve been told, there are still space available flights available for American retirees and other classes of Americans, but that’s all I know.

The Clark airport is only about 45 minutes from where I live if I use the Subic-Clark-Tarlac Expressway (SCTex). Since that expressway was completed, a trip to the Manila airport usually takes around four hours.

Do I need to ship anything ahead of my departure from the United States?

I shipped five boxes of clothing and kitchen items when I left the United States in 2006. I can’t tell you what you might need when you get to the Philippines but you need to know that you can get almost anything there. Don’t believe everything you hear from your neighbors and relatives. I was told I wouldn’t find American washers and dryers, yet I have a set in my laundry room. That’s just one example.

The key thing is to make sure you have a contact in the United States who can ship you what you need after you arrive. Freight companies are most abundant in California when it comes to shipping freight to the Philippines.

What is the current exchange rate?

I hesitate to tell you since it fluctuates. As of now, it’s hovering just above 44 pesos to the dollar. In more than seven years, I’ve seen it as high as 50 and as low as 40.

More questions?

I seriously doubt I’ve answered anything to your complete satisfaction. If you have questions or other information, please leave a comment.

December 29, 2013
Expats and Foreigners

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