How to Retire on $1500 per Month

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.

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".

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.

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.

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!

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!