Cost Of Living In the Philippines: Can You Afford It?

It’s easy to why the Philippines has become such a popular retirement locations for American retirees. It is a beautiful country with warm weather, friendly people, and a relaxed way of life. The perfect location to retire.

However, the main reason why the Philippines has seen an influx of American retirees in recent years is its affordability. It’s possible to enjoy a very comfortable lifestyle in the Philippines for a fraction of the cost of living in the USA. 

Real estate, clothing, energy costs, transportation and eating out are all much more affordable. In this guide, I’ll explain how much it costs to retire in the Philippines.

Why Move To The Philippines?

The Philippines is a large archipelago of 7,641 islands located in the South China Sea. Most of the nation’s islands are uninhabited, with the majority of the 100 million residents living on the largest islands of Luzon, Negros, Samar, and Palawan. 

The Philippines is centrally located within South East Asia, sharing maritime borders with China, Vietnam, Indonesia, Japan, Malaysia, Palau, and Taiwan. This location makes it a fantastic retirement destination for anyone interested in exploring Asia and Oceania. 

It has one of the most Westernized cultures of any Asian nation, due to the influence of past colonial powers including the Spanish, British, and Americans. The locals enjoy American culture and are friendly towards Westerners. 

The pleasant climate attracts many American retirees to the Philippines. It is warm all year-round, with average low temperatures in the mid-70s. Retirees can make the most of the weather by exploring the many stunning beaches, waterfalls, secluded coves, and lush forests located on the many islands.

However, the most common why Americans move to the Philippines is the affordability. It has a very low cost of living compared to the United States, allowing retirees to purchase a comfortable home and enjoy a lavish lifestyle while on a budget.

Where Does The Philippines Rank In The Cost-Of-Living Index?

The Cost Of Living Index is the simplest way to determine how expensive a location is. It compares the relative cost of living for different countries based on how much common consumers items cost to purchase. 

The Philippines is currently the 54th most affordable country to live in out of the 138 countries included on the list. This makes the Philippines slightly cheaper than countries like Bulgaria, South Africa, Poland, and China. It is slightly more expensive than countries like Malaysia, Ghana, Albania, Serbia, Romania, and Vietnam.

The United States is the 112^th most affordable nation on the list, with a cost of living index of 71.92. This makes living in the United States about 2.6 times more expensive than the Philippines. 

The Economists Big Mac Index is another useful comparison for assessing cost of living differences. It compares the cost of buying a big mac in different countries to determine purchasing-power-parity (PPP). 

You can buy a Big Mac for 142 Pesos in the Philippines and US $5.66 in the United States. The difference between this implied exchange rate and the cash money exchange rate means the Philippines Peso is 47.8% undervalued.

Cost of Food & Dining In The Philippines  

Filipino cuisine is diverse, interesting, and delicious. The different ethnolinguistic groups on the many islands have their own culinary traditions, which makes it an exciting country for foodies to explore. You will notice a variety of influences on Filipino cuisine from different countries, including China, India, America, and Spain. The best part is — it’s all incredibly cheap, which makes it possible to check out the many restaurants and food stalls, even if you are on a tight budget. 

If you prefer to cook, you will be happy to discover that most fruits, vegetables, canned goods, meat, fish, and other food items are very affordable. It is easy to access the types of foods that you might normally enjoy in America as there are Western restaurants in most towns and cities.  

Cost of restaurants in the Philippines 

A simple meal at an inexpensive restaurant 150.00 ₱ (3.10 USD)

A three-course meal mid-range restaurant for two people 1,000.00 ₱ (21.00 USD)

McDonald’s Combo Meal 150.00 ₱ (3.10 USD)

Cost of groceries in the Phillipines

Milk (regular, 1 liter) 86.00 ₱ (1.80 USD)

A loaf of White Bread (500g) 58.00 ₱ (1.20 USD)

Rice (white, 1kg) 50.00 ₱ (1.05 USD)

Eggs (dozen) 88.00 ₱ (1.80 USD)

Cheese (1kg) 307.00 ₱ (6.30 USD)

Chicken Breast Fillets (1kg) 197.00 ₱ (4.00 USD)

Beef Round (1kg) 310.00 ₱ (6.35 USD)

Tomato (1kg) 72.00 ₱ (1.47 USD)

Potato (1kg) 89.00 ₱ (1.84 USD)

Water (1.5-liter bottle) 39.00 ₱ (0.79 USD)

Bottle of Wine (Affordable, mid-range) 350.00 ₱ (7.20 USD)

Domestic Beer (0.5-liter bottle) 53.00 ₱ (1.10 USD)

Imported Beer (0.33-liter bottle) 92.00 ₱ (1.89 USD)

Cigarettes 20 Pack (Marlboro, or other popular brands) 100.00 ₱ (2.00 USD)

Coke/Pepsi (0.33 liter bottle) 19.00 ₱ (0.65 USD)

Transportation Costs In Philippines

The Philippines has a reasonably advanced transportation system that consists of an extensive road network, dozens of airports, rail lines, and various watercraft. While the roads near towns and cities are paved, you will run into many dirt or gravel roads if you explore the smaller islands. 

The types of transport you use will vary based on where you decide to live. If you are living in a major city centre, you can rely on public transport. However, if you wanted to explore the island where you live, buying a car is preferable. If you have decided to reside on one of the smaller islands, buying a boat would be advisable.

Purchasing a Vehicle In The Philippines

Buying a new, modern car can be slightly more expensive in the Philippines compared the United States. However, it depends on the model you choose, as there are now an influx of cheaper Chinese vehicles available. You could expect to pay about $27,000 for a Volkswagen Golf or $23,000 USD for a Toyota Corolla.

In terms of second hand vehicles, you can pay about $5,800 USD for a 2011 Mazda Cx7 or $6,200 for a 2013 Lexus LS460. One liter of gas costs 50.50 ₱ (1.05 USD).

Cost Of Getting Around Philippines Using Public Transport 

• One-way Ticket (Local bus) 10.00 ₱ (0.21 USD)
• Monthly Pass (Local bus) 520.00 ₱ (10.60 USD)
• Taxi Start (Normal Tariff) 40.00 ₱ (0.80 USD)
• Taxi 1km (Normal Tariff) 13.50 ₱ (0.28 USD)

Cost Of Housing & Utilities in Philippines 

Housing is very affordable in the Philippines. However, the price you will pay to rent or buy a property will vary dramatically based on where you decide to live. Modern apartments in the centre of Manilla can be fairly expensive, while properties in a less populated areas are so cheap that you might consider buying several houses. 

Cost of Apartments in the Philippines (Rent per month)

Located in a major Philippines city

(1 bedroom) 16,500.00 ₱ (341 USD)

(3 bedrooms) 33,000.00 ₱ (670 USD)

Located outside of a major city center

(1 bedroom) 9,400.00 ₱ (190 USD)

(3 bedrooms) 18,700.00 ₱ (380 USD)

Cost of Houses in the Philippines (Rent per month)

Rental prices for a house in major cities will be more expensive, but there are still affordable options if you don’t mind living on the outskirts of the city. Many of the houses in the major cities are quite beautiful and have luxury appointments.

A luxurious 3, 4, or 5 bedroom house in a nice Manilla suburb might cost as much as 100,000.00 ₱ per month, which is around $2,000 USD. However, outside of the major cities, you can rent houses for as little as 9,00.00 ₱ (400 USD)

If you prefer beachside lifestyle, it’s possible to find luxury beachfront villas in locations like Guiwang, Cebu for as little as 38,000 ₱ per month ($780 USD).

Buying Property in the Philippines

Foreigners are not allowed to own land in the Philippines, but they can still legally own a residence. To get around this restriction, you can buy a freestanding house and lease the land on which it resides.

Foreigners can also buy property through a corporation, as long as it is at least 60% owned by Filipino citizens. If you marry a Filipino citizen, you can buy a property and simply put it in your spouse’s name. In many cases, a long-term lease agreement is a better option than buying.

Once again, the purchase price will vary greatly based on location. In a major city, you will pay about $165 per square foot, which means a 1000-square foot home will cost somewhere around $165,000. Outside of the city centre, the price is closer to $90 per square foot, so the same sized house might cost close to $9,000.

It’s easier to buy a condo in the Philippines, as the Philippine Condominium Act allows foreigners to purchase them outright, as long as at least 60% of the building’s occupants are Filipino citizens. 

Cost of Utilities In The Philippines

Basic monthly payment for an apartment:

(Electricity, Heating, Cooling, Water, Garbage) 6,000.00 ₱ (120 USD)

Basic monthly payment for a home: 

(Electricity, Heating, Cooling, Water, Garbage) 8,000.00 ₱ (160 USD)

Internet (60+ Mbps, Unlimited Data) 2,200.00 ₱ (46.00 USD)

Employment & Income in Philippines 

If you intend on working while in the Philippines, you’ll be happy to discover that the economy is usually quite strong, with many employment opportunities on offer. The largest industries include manufacturing, mining, pharmaceuticals, electronics, and tourism. 

The average yearly salary for jobs in Philippines is fairly low at 180,000.00 ₱ a year ($15,964 USD). However, if you are highly skilled and working in an in-demand industry you will earn much more.

Childcare Expenses in Philippines

Childcare is quite affordable in the Philippines, with pre-school or kindergarten costing about 10,200.00 ₱ ($210.00 USD) per month. Public schools are quite affordable, but you can expect to pay about 285,000.00  ₱ ($5,800.00 USD) annually.

Healthcare & Medical Expenses in The Philippines

Another reason the Philippines being a popular retirement destination is that the cities and larger towns have excellent hospitals and pharmacies. However, the quality of care can vary in regional and rural parts of the country.   

Although all citizens have free access to public healthcare, expat retirees do not. They must pay to enroll in PhilHealth, which is the nation wide health coverage scheme. This costs about 17,000 ₱ per year ($343 USD). 

It’s important to note that this form of insurance does not cover certain procedures and some medications. As a result, many expat retirees choose to purchase private health insurance instead, which offers a higher level of coverage.

If you are not insured healthcare costs can be very high. An appointment with a doctor can cost around ₱500, a night in a private hospital would be about

₱2,500 and a night in ICU can cost more than ₱30,000.

Cost of Clothing & Shoes in The Philippines 

The Philippines has a large manufacturing sector, which produces a lot of high quality clothing and footwear. As a result, locally made apparel is very affordable. The close proximity to China also means inexpensive Chinese-made clothing is available. 

However, if you want to wear designer labels or imported American clothing, expect to pay a premium. The average cost of imported clothing and shoes in the Philippines are:

Casual Clothing

1 Pair of Jeans (Levis 501 Or Similar) 2,000.00 ₱ (USD $42.00)

1 Summer Dress or Spring Skirt (Popular chain store) 1,300 ₱ (USD $27.00)

Shoes

1 Pair of Running Shoes (Nike or Adidas) 3,900.00 ₱ (USD $80.00)

 Pair of Men’s Business Shoes  3,200.00 ₱ (USD $67.00)

Taxes & Legal Information in The Philippines 

The Philippines government is welcoming of expats because of the economic stimulus they bring to the country. As a result, they have fairly generous tax arrangements available. Here is a short overview of taxes and legal arrangements in the Philippines.  

Income Tax in The Philippines

Expat retirees are only taxed on income that is earned from Philippines sources. It is a progressive taxation system with a maximum rate of 35%. The government will not tax any retirement income you receive from a pension, 401(k), individual retirement account (IRA) or other retirement plan.

Capital Gains Tax

There is a 6% capital gains rate on the sale of Filipino property and a 15% rate for the sale of shares. However, there are several exceptions to the capital gains rules, including an exemption for people selling a property to build a new one. Talk to an accountant to ensure you pay the correct amount of capital gains tax.

VAT Tax

Some goods will attract a sales tax of 12%.

Real Estate and Property Tax in the Philippines

The Philippines has a Real Property Tax which applies to land, buildings, and other types of property. This tax is levied by a province, city, or municipality in a metropolitan area and is between 1 to 2% of the assessed value. 

If you are buying or selling property, there are several fees and taxes to consider. They include:

• Notary fee (1% to 2% paid by buyer)
• Local Transfer Tax (0.50% to 0.75% paid by buyer)
• Registration Fee (1% paid by buyer)
• Documentary Stamp Tax (1.5% paid by seller)
• Capital Gains Tax (as mentioned above, 6% paid by seller on any capital gains)
• Real Estate Agent’s Fee (3% to 5% paid by seller)

Retirement Tax in the Philippines

There is no retirement tax in the Philippines with all income received from your registered retirement plan being tax exempt.

Inheritance Laws in Philippines 

Inheritance laws are fairly similar to those in the USA. If a will is present, your assets will be distributed in accordance with your final wishes.  If there is no will a civil code is used to determine how wealth will be divided within the family. 

This code specifies that there are ‘compulsory heirs’ who must receive a certain percentage of your assets. The spouse must receive at least 25% if only one legitimate child or an equal portion to the children if there is more than one child. If there is 1 legitimate child, they must receive at least 50%, while 2 or more children must split at least 50%  between them. 

The remaining assets can be divided at will. For example, if a family had 5 children, they would split 50% between each child and the wife would receive 10% (the same as each child). The remaining 40% could be disposed of at the discretion of family members. 

There is an estate tax in the Philippines, which is a tax on the transmitting of the estate of the deceased upon death to the heir. This tax is payable whenever the value of the estate is higher than ₱200,000. 

For foreign expats, it is limited to a flat rate of 6%. However, if you become a permanent resident it will range from between 5% for estates valued at ₱200,001 to 500,000 and goes up to 20% for estates valued at more than ₱10,000,000.

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Entertainment Cost In The Philippines 

The Philippines is an exciting retirement destination with a lot of entertainment options including music venues, theme parks, cinema, theaters, cultural events, and markets. There is also a great culinary scene with incredible street food and restaurant.  

There are also plenty of free entertainment options, including the many spectacular beaches, coral reefs, waterfalls, and hiking trails. Water sports are particularly popular in the Philippines like fishing, boating, jet skiing, and surfing. 

In terms of cost, you will spend about:

• ₱ 260.00 (USD $5.50) for a movie  ticket
• ₱ 190,000.00 (USD $39.00) for a monthly gym pass
• ₱ 285.00 (USD $5.80) to book a tennis court for an hour on a weekend
• ₱ 870.00 (USD $18.00) for a nice dinner for two people at a local tavern
• ₱ 2,100.00 (USD $44) for a lavish 3 course dinner for two (with wine and desert)
• ₱ 2,200.00 (USD $46.00) for two tickets to a theatre (best seats in the house) 
• ₱ 249.00 (USD $5.00) for a cocktail at a local club
• ₱ 162.00 (USD $3.30) for a cappuccino in a nice downtown cafe 

What to Expect Before Arrival In The Philippines  

Here is some more information about the additional costs you might incur when retiring in the Philippines.

Cost of Immigrating to the Philippines

You will have to jump through several hoops to retire to the Philippines. The first step is to obtain a Special Resident Retiree’s Visa (SRRV). To be eligible for this Visa, you must:

• Be 50 or older
• Place a minimum of $10,000 into a Philippines bank if you have guaranteed monthly income. This increases to $20,000 if you do not have a guaranteed income. This amount covers you and two dependents.
• Deposit $15,000 for each of your additional dependents.
• Provide the government with proof of a pension which pays at least $800 a month ($1,000 for couples).

The Filipino government considers all types of retirement income to be a ‘pension’. 

There will be a one-off visa application fee of $1,400, plus $300 per dependent. Once you have received approval, you will then need to pay a $360 annual fee to renew it (plus $100 per child). 

Retirees also need an Alien Certificate of Registration (ACR-I) card. This card features a microchip containing bio-metric data including your fingerprints. It is used with your passport as a means for obtaining re-entry into the country. This card costs $50 and must be renewed annually. 

Can I Use USD in The Philippines?

Some stores will accept USD in the tourist areas of the Philippines. However, you will usually pay more for your purchases if using USD or exchanging it for Pesos in a touristy location. It’s best to use the Philippine Peso for purchases.

How Much Cash Can I Bring into The Philippines?

Travelers are allowed to bring up to USD $10,000 in cash and other forms of currency (traveller’s checks money orders, deposit certificates etc) into the Philippines. However, if you submit the Foreign Currency and Other FX-Denominated Bearer Monetary Instruments Declaration Form, you can bring in greater sums.

How Much Does it Cost to Live Comfortably in The Philippines?

As you can see, the cost of living in the Philippines is quite low. This means you can enjoy a comfortable retirement on a relatively low income. A couple enjoying a comfortable lifestyle could live on as little as $1,000 per month. However, if you would like a more lavish lifestyle, expect to spend between $1,200 to $1,600 a month. 

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How Much Do You Need to Retire in The Philippines?

To retire comfortably in the Philippines, you will need a minimum of $10,000 USD deposited into a Filipino bank account. You should also have an income of at least $1,000 per month. If you have savings of $100,000, you should be able to live comfortably in the Philippines for at least 10 years.

Sample Monthly Budget in the Philippines

Rent: $500 USD

Utilities: $140 USD

Transportation: $80 USD

Fuel (Car): $30 USD

Eating Out: $200 USD

Entertainment: $100 USD

Internet: $45 USD

Additional Food: $100 USD

Health Insurance: $50 USD

Shopping: $100 USD

This budget comes to a total of $1345 USD. For this price, you will enjoy a comfortable lifestyle with a modern rental property, a lot of eating out, and plenty of spending money.

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