How to Retire on $1500 per Month

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When you are in your mid-twenties until low forties, you don't think much about retirement. In general most people are so busy with the hustle and bustle of city life that they live day to day working, earning, eating, sleeping, and partying. The younger you are, the closer in the future you are looking. For example, teenagers look as far as tomorrow all the way to the weekend. As you get into your twenties, thirties, and low forties, you start looking out as far as next month or all the way to next year.

However, when you get past 45 years of age, you start looking 5 to 15 years out; you start thinking about retirement. Don't get me wrong, if you are younger, you may get the occasional sense of retirement after a long vacation, but in general, you never really look that far out. But 45 and over is just a different age group--not quite that old, but only a decade to a decade and a half from possible retirement.

If you are like most people, you may start finding yourself worried about whether you will have enough for retirement. Will social security still be around? Are they going to keep pushing the retirement age so that you will get lower and lower percentage of what you put in over the years?

Well, fear no more. If you are projected to have at least $1500 a month, you can retire comfortably. You want to know how? Then by all means, continue reading and I will explain.

Retirement Mentality

OK. If you live in the United States, what comes to mind when you say "retirement"? A few common questions or thoughts come to mind:

  • Will I have enough income to cover my cost of living?
  • Should I go to a retirement home?
  • How will I manage with the minimal fixed income I will collect?
  • I can finally enjoy life, and do what I want to do!

Some are pretty much set and could probably live comfortably; but for most, retirement may be a challenge because their retirement income may not be sufficient to live on comfortably--especially if they are only going to be taking in only around $1500 a month!

Well, if you are in the poor retirement boat, you'll have to change your mindset. Stop thinking about retiring in the US. Think "abroad".

Abroad? Where?

If you are scared of the thought of retiring abroad, don't be. Some countries outside the US are US citizen friendly. Most of these places also place a high value on the US dollar; and some of these countries are so westernized that you'll feel like you are still in the US (i.e. Hawaii)!

For this article, I will focus on the Philippines as the country you should consider for retirement. Here are some basic facts about the Philippines:

  • Capital city: Manila
  • Biggest city: Quezon City
  • National language: Tagalog
  • Other languages: English, Spanish, Chinese, regional dialects (there are many)
  • Government type: Constitutional Republic
  • Population: 94 million (2010 estimate)
  • Currency: Peso (1 peso = 0.0233 USD (US dollar), or 43 pesos = 1 USD; rates subject to change, but this is roughly the 2011 rate of exchange)
  • Per capita income (in USD): $2700 (2012 estimate), or $225/month
  • Special note: From Kindergarten to college, schools teach in English, except when they are teaching Filipino-related classes like the Philippine history or the Tagalog language. This is why most people there speak English (although with a very strong accent).

(Note: All figures preceded by '$' are in USD.)

As you can see, you are already looking at a good currency exchange rate--43 pesos to 1 USD. This means that if you are taking in $1500 in retirement, you are getting 64,500 pesos per month.

Also look at the per capita income estimate for 2012. It is $2700. This means that if you averaged out the income of Filipinos for the year, each would get $2700 per year, or $225 per month. If your retirement is $1500 per month, your retirement income is 6.7 times that of the per capita income of Filipinos.

In the next section, you will see what you can do with $1500 per month.

Cost of Basic Necessities

In order to retire comfortably, you'll need to consider costs for the following essentials:

  • Housing
  • Utilities
  • Food
  • Transportation
  • Healthcare
  • Entertainment

Housing

Whether you are single or a couple retiring, a home with at least 2 bedrooms and 2 baths should suffice. In the Philippines, you can purchase a 3-bedroom and 2-bath home for at least $25,500. You can also rent. For about $350 per month, you can get decent housing.

Utilities

Utilities in the Philippines run around $230 per month. This would include water, electricity, gas, phone, and cable TV.

Food

Groceries and markets are plenty in the Philippines. Plan for about $700 per month on food. This takes into account occasional western fast food.

Transportation

Driving around the Philippines is the worst if you aren't used to it. Drivers there, especially those that drive in the crowded city don't follow road lines. Because it is so crowded, they convert a 2 lane road into 4 lanes. As such, I would recommend just taking a jeepney where ever you go. Plan for about $100 per month.

Healthcare

The cost of healthcare in the Philippines is very affordable. It generally costs only 10% what it would cost you in the US. The doctors there are graduates from the top schools in the Philippines and most of them have studied in medical schools in the US. Nurses there are also trained under high standards; in fact, a large number of nurses go to work in the US. Because it is relatively inexpensive, maintaining a good buffer (around $2000) in your savings should suffice in meeting unexpected medical needs.

Entertainment

What's the purpose of retiring if you can't have fun. Living in the Philippines is like being on vacation, provided you spend time visiting places and doing things to keep things interesting. As such, you'll need to take into account costs for entertainment as part of your retirement expenses. This will vary.

Adding It All Up

Let's compute potential costs in each category of expenses, and let's see how far our $1500 per month will take us. The figures below are per month values.

  • Housing: $350
  • Utilities: $230
  • Food: $700
  • Transportation: $100

The above totals $1380. This leaves the figures below for entertainment or savings:

  • Entertainment: $120
  • Healthcare: $0 (need $2000 buffer in savings for unexpected medical needs)

This isn't bad! The above shows $120 left for entertainment. But some entertainment will not cost anything. For those times they don't, why not save it for a rainy day?

If your retirement income is more than $1500 and you have several hundred dollars to spare, you can probably hire local help to make the job of your day to day household chores easier. If you live an active life, you may not need help; but if you do,consider hiring help.

Again, in the Philippines, the per capita income is $225 per month. In most cases, because the wealth in the Philippines is limited to a small fraction of the population, the number of people with a salary worse than $225 per month may actually be more significant. In other words, a typical salary for help may actually be less than $200 per month.

In fact, I found an article on the web that says, the typical cost for a maid in the Philippines is only 2000 pesos (or around $50) per month. Wow! Don't feel bad because you are not only helping the person needing work, but you are also helping yourself and the local economy. What a win-win-win scenario!

Summary

At this point, it is obvious that you can retire with only $1500 a month. You can't do it in the US; however, you can do it in the Philippines, an English speaking country where the US dollar is highly valued. On top of that, if you have a few bucks to spare, you can hire yourself a maid to help you with chores around the house!

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Comments 19 comments

Brett.Tesol profile image

Brett.Tesol 5 years ago from Somewhere in Asia

This is so true! It is all about your willingness to change, then you can have a good retirement. There will always be somewhere in the world that is cheap enough to retire in if you are on a US/UK pension.

Nice hub, voted up and useful.


forlanda profile image

forlanda 5 years ago from US of A Author

Thank you Brett.Tesol. I appreciate the vote up and useful note.

I'm glad you agree.

In the US there are many baby boomers approaching retirement. I'm sure many of them are worried, and I hope this can provide them some options.


trimar7 profile image

trimar7 5 years ago from New York

I have heard that the Phillipines is a beautiful place. Very comprehensive. It would be great if you could go back and clarify in each place whether you are speaking US money or pesos. You did this in many cases but not all and I was not certain toward the end. It is a well written hub. You start out explaining about retirement in general then lead into the details. Super job!


froch profile image

froch 5 years ago from Tychy

Very useful knowledge, special for people who are not thinking about retirement! Vote up!


forlanda profile image

forlanda 5 years ago from US of A Author

Trimar7, thanks. All the figures that are preceded by "$" are US dollar amounts. Sorry about the confusion. I'll clarify it.

Froch, thanks for visiting and the vote up. I appreciate it.


point2make profile image

point2make 5 years ago

What a great hub! Thanks for the info. You have given us something to think about.


forlanda profile image

forlanda 5 years ago from US of A Author

Point2make, thanks! It is definitely something to think about especially as you near retirement age; and when retirement income is a concern, it is also time to think outside the box. Thanks for stopping by.


Morsest 4 years ago

Avoid Mindinano....rebels etc.


forlanda profile image

forlanda 4 years ago from US of A Author

I know when I was young that is what I heard. It's been over 35 years since then. Is the situation there still the same?


patrick 4 years ago

looking to spend winters there how much are short term rentals


forlanda profile image

forlanda 4 years ago from US of A Author

I would have to research that. The information I gathered on this one was based on normal rental terms. But I'm sure it wouldn't be too far off.


tipstoretireearly profile image

tipstoretireearly 4 years ago from New York

It'll be interesting to see if more retirees start retiring in places like the Philippines as they realize that the great recession has left them unprepared to retire in the US. It looks like there are some real advantages to making such a move.


forlanda profile image

forlanda 4 years ago from US of A Author

Tipstoretireearly, it is very likely, because the value of the dollar, although weakening, is still relatively strong compared to other currencies. Thanks for stopping by.


Les Trois Chenes profile image

Les Trois Chenes 3 years ago from Videix, Limousin, South West France

Food for thought here. I moved to France ten years ago from Britain, but prices are starting to catch up with us here. You make the Philippines sound most attractive!


forlanda profile image

forlanda 3 years ago from US of A Author

You can't beat what you can get there for the money. Even with the US' depressed economy, the dollar still commands 41.51 Philippine Peso, making a lot of things you could buy there of great value. And if you love the west's lifestyle, the Philippines has that too!


Thelma Alberts profile image

Thelma Alberts 3 years ago from Germany

I can live with my hubby in the Philippines with a lesser retirement money than that, like € 500-700 per month. Well, it always depends on a lifestyle you have. It´s more than enough for me but I should say, I don´t have to pay the rent. Thanks for sharing this very informative hub. Happy New Year 2013!


forlanda profile image

forlanda 3 years ago from US of A Author

Happy new year Thelma. Yeah, it really depends on your lifestyle. Are you and your hubby planning on retiring in PI?


agusfanani profile image

agusfanani 3 years ago from Indonesia

Hi forlanda,

I belong to those who start thinking about retirement and maybe I will teach English, dig more crating activities to create some things sellable, and open a small shop for my retirement, I hope those incomes can keep me survive. I had been to the Philippines for one month some years ago and I still have the unforgettable happy memory about my activities there that I want to visit it again someday.


forlanda profile image

forlanda 3 years ago from US of A Author

I'm glad you had great memories there. My last trip there was great. It was what made me think about the possibility of retiring there. I haven't made the final decision yet though.

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