How about this for an early retirement:
The money: Annual spend €20,000 / £17,200 / $20,800 for two people
The age: He was 47 and she was 37 at the time of retirement
The location: A tropical island in the Philippines
I love these real-life stories. There's more than one way of retiring early, and there's always something to be learned or inspiration to be found from what others do. Back when I was making my own early retirement decision, I used similar stories to help me imagine early retirement life and give me the confidence to take the leap.
Let's find out more about Mr & Mrs G, and their retirement life in the Philippines.
To start off, can you tell us a little about yourselves.
We're Mr G from UK and Mrs G from the Philippines. Just two normal people, now living a life we wouldn't have thought possible. We met in Dubai 7 years ago, and three years ago welcomed our dog, Miguel, into our family.
What did you do as a job?
Mr G: I left school at sixteen and got a job as an office junior. I was useless, so they made me an assistant in the IT department instead. That suited me better and, over the years, I worked my way up to IT manager. After 19 years with that company, I got made redundant and struggled to find another job in the UK. An ex-colleague called me about a job in Dubai, and I spent the next 10 years working in the Middle East.
Mrs G: I went to university and graduated as a Licensed Architect. After a few years working at an arcitectural firm in Manila, I took a job in Dubai - a lot of Filipinos work abroad. Unlike Mr G, I never got made redundant, but my last company weren't great at making salary payments. Perhaps that was a blessing in disguise as it encouraged us to take the leap into early retirement.
What made you decide to retire early? Was it always an ambition that you worked towards, or did it happen some other way?
Mr G – Work was never a passion, just something you have to do. In the UK, I made my pension contributions, but the rest of my salary all got spent. I assumed I'd work until the state retirement age of 67. Retiring before 50 might have been a dream, but never a realistic possibility.
After moving to the UAE (aged 36), my salary increased and, following advice from a friend, I started to save and invest. Living in another country broadened my horizons and I started to wonder if my future could be somewhere other than the UK. That's when I started to think retiring by 50 might be possible. I made a plan: 1. save so that I could repay the mortgage on my UK house so the rent would be an income; and 2. build some investments to generate another income.
Mrs G – I didn’t think about retirement. I enjoyed my work and assumed I'd keep doing it. I had no plans to return to the Philippines, although I didn't think where else I might end up, just somewhere other than the Philippines.
Was there anything specific that made you retire when you were 47/37, or did it just happen by chance at that age?
I (Mr G) was probably the main driver, as I'd decided I wanted to retire by 50. In the end, I was 47, so even better. I was made redundant again and Mrs G's employer was defaulting on salary payments, so we looked at our finances and, with some tweaks to our plan, decided we could retire then, a few years ahead of target.
How did you manage to save enough money to allow you to retire early?
We had good jobs, but we didn't have crazy salaries. The 6 main things that helped us retire early are:
Working in Dubai increased our earnings - our salaries were a little higher than in our home countries and were tax free
We implemented a five-year plan to save for early retirement
We decided to retire to a lower cost of living location
We use a budget to keep our costs under control
I (Mr G) had a tenant in my UK house which helped pay a chunk off the mortgage
We don't have kids, and they seem to be really expensive!
Can you tell us more about your five-year plan to save for early retirement?
In 2015, we decided to get serious about early retirement and made a plan. Soon after that, we discovered a place in the Philippines that we thought would be perfect for early retirement, and that made it easier to stick to the plan. The main components of our five-year plan were:
Challenge ourselves to live off one salary and save the second salary. This forced us to budget and look for areas where we could reduce costs
Save rent by moving to a smaller apartment
Spend less on socialising
Take fewer staycations
Reduce from 2 cars to 1 car
Our birthday and Christmas gifts were thing we would use in our future early retirement life
Made a savings and investment plan, and stuck to it
During these 5 years, we figured out how much retired life would cost
Be excited by what the plan would give us - we would be retired early in time to celebrate Christmas 2020 in our new house
Presumably you chose the Philippines as your early retirement location as that's where Mrs G is from?
Actually, no. We were thinking of Asia, but we thought Thailand or Sri Lanka. We wanted year-round warm weather, low cost of living and ideally near the beach. Safety/security was particularly important for Mrs G. If we were to think outside of Asia, Spain might have been an option because of the climate. We even considered living on a boat.
Our idea on location changed when I (Mr G) got paid for some consultancy work. To ensure the money wouldn't be frittered away, I bought a plot of land in a gated community in Coron Town, on the Philippine island of Busuanga. At that time:
we had never talked about retiring to the Philippines
I (Mr G) had never even been to the Philippines, and
the pièce de résistance, I didn't tell Mrs G that I was buying the land!
Only after the plot was purchased did the Philippines become a possible early retirement destination. Brave, stupid, lucky? Maybe all of those things, but it turned out to be lucky.
What did your family and friends think when you told them you were retiring and moving to the Philippines?
Mrs G – in a word "shocked", but in a good way. "OMG, can you really do that, you're only 37!" was a typical response. My friends wanted to know how we did it so they could think of doing the same.
Mr G – my friends didn’t show much interest, probably because they knew of our 5 year plan, so it wasn’t really a surprise.
Can you tell us a bit about the country, the area you live, the facilities and what your house is like?
The Philippines is in Southeast Asia and consists of more than 7,000 islands. We live in Coron Town, on the island of Busuanga which is in the province of Palawan. Our town is quite small, but it attracts lots of visitors because of access to some great wreck diving and also beautiful beaches and scenery. We're about an hour's flight from the capital, Manila, or a very long ferry journey.
Our house is on a gated community that has a clubhouse and a swimming pool. This was a big draw for us. Here are a few pictures.
To be honest, not all of Coron looks like this, here are some pictures of other parts of town.
Would you recommend that others consider retiring to a different country? What are the benefits and what are the potential pitfalls of doing so, perhaps in general but also specifically for the Philippines?
We think retiring to a different country is worth considering, but it won't suit everyone. The Philippines is a mixture of first and third world - thinking about our location, Coron Town:
Negatives:
It can be frustrating trying to organise things - not everything works as you hope.
Some food items that you're used to might not be easily available or are a hassle to get hold of.
There are power cuts. But there are workarounds for them e.g. we've bought a portable power bank this year.
You might be far from your family (but we're used to it from working overseas).
Positives:
It has a low cost of living.
Living in a different country is a new experience, it pushes us out of our comfort zone.
Although our town is small, it has quite a diverse expat population and we've found plenty of friends.
We like the climate.
Ahead of our relocation, we were a little concerned about finding friends, but it's actually been quite easy. We have a good group of Filipino and expat friends.
What do you do to keep yourself busy in retirement? Do you get bored or sometimes find yourself at a loose end?
These are some of the things we do:
Meet up with friends
Take Miguel, our dog, out for walks or to play in the river
Go on trips to the beach or other places that we enjoy
Go to town for coffee, lunch etc and often bump into friends and get side-tracked.
Go cycling with friends
Tour on our motorbike
Have fun with the buggy, even if that’s mostly fixing it
Deal with investments
Fix stuff, do maintenance chores. We've become more DIY capable, instead of paying others to do it
Be a bit lazy – read something, watch something
Unlike David @iretiredyoung, we aren't big on routines or targets/to-do lists. I (Mr G) have also let my exercise slide since retiring.
How to you generate the money that you need for your retirement?
We have the following investments:
Structured notes. If all goes well, these generate a quarterly income.
P2P lending which provides an income throughout each month.
Mr G's UK pension. This is invested in ETFs. We can start accessing this in 5 years time.
So far, the income from the structured notes and the P2P lending have covered our costs. There's also been some extra income if Mrs G takes on some design and architectural work. We haven't had to drawdown on the principle at all - this is a red line for us.
At the start of our early retirement, we had rental income from the UK house of £650 / €750 / $790, and we lived off this (excluding vacations). We're spending more now, but it's good to know that we were happy living off less before, so could do the same again if we ever needed to. We've since sold the house and put the proceeds into the investments noted above.
Do you still work at all, have any side hustles to earn some additional income?
I (Mrs G) sometimes accept some design and architectural projects, but only if I want to. It isn't needed for our finances, and wasn’t part of the original retirement plan, but I'm open to it if it's an interesting project. Over the last year, I've probably done one month of work.
How much do you spend? How do you monitor it? Do you have a budget?
Maybe we should first explain about our house. We own it outright so have no rent or mortgage to pay. It's a two bedroom house of 100m² (1,076 ft²). Being in a gated community with a clubhouse makes it more expensive, but the cost of €90,000 / £77,500 / $94,000 is still much less than a similar property would cost in many countries.
For our costs, we spend around €20,000 / £17,200 / $20,800 a year:
€1,100 / £950 / $1,150 per month (annually €13,200 / £11,400 / $13,800) covers groceries, eating out, utility bills, internet, dog food and medication, car and motorbike fuel, toiletries, vitamins. Sometimes we might go over this by up to 10%.
€7,000 / £6,000 / $7,300 for a 5 week vacation to Europe this year. We went a bit crazy as it was our first vacation for 3 years. In future, we aim to stick closer to €5,000 / £4,300 / $5,200.
Unexpected items such as new car tyres, air-conditioner repair, etc. This year we bought a power bank/battery so that we have power if the electricity goes off. It's pushed us a bit over the budget this year - normally we'd have more headroom for these unexpected items because we don't plan to spend so much on vacations as we did this year.
We manage our costs by having a monthly budget and then breaking it down into a daily amount for day to day costs like groceries, eating out, trips etc. We keep a record of what we spend each day and know that if we overspend one day, we must underspend another day to compensate.
We also have some flexibility. If something is going to push us over budget, we can decide not to do it, reduce the amount we'll spend on vacations, use some of the money that Mrs G earns, or choose whether we want to dip into savings/emergency funds.
For our first two years of early retirement, we lived on less than we are now, so we also know that we have some scope to cut our costs by a few thousand if we needed to.
Do you worry that you won’t have enough money to last for your full retirement?
Mrs G: I do. I worry that the investments won’t pay out as hoped, or when the emergency fund goes lower than I'm comfortable with.
Mr G: No, I'm relaxed about it. Since retiring 3 years ago, we haven't touched our capital – we refuse to. That gives me confidence. We also get access to my UK pension in five years time. And remember, when we first retired, our living costs were 30% less and we still loved our life - we cooked at home more, partly through choice and partly because of Covid, we didn’t have the car, and the micro-brewery hadn’t opened - that brewery/bar isn't helping the budget!
Looking back, would you have done things differently?
If we could turn back the clock...
Perhaps we could have saved more in our early years in Dubai.
I (Mr G) wish I had explored working abroad earlier.
I (Mr G again) took a gamble buying the plot of land in Coron. I probably should have thought more about it, and perhaps even mentioned it to Mrs G beforehand! However, it worked out, so maybe too much thinking can sometimes work against you.
Although there are some things we could have done differently, we like to think about what we did well:
We're proud of how much we achieved during our 5-year plan period. We were really focused on our goal because we were excited about the life that was ahead of us.
We didn't delay our deadline to retire early, even though I (Mr G) got made redundant from my job and Mrs G faced problems with getting her salary payment. Instead of using these as a reason to delay, we decided to go for it, and in fact retired after only 4 years of our 5-year plan.
What are your plans for the future?
You never know what might be around the corner, but we like our life and don’t plan to change anything significantly. We want to travel once a year, there are lots of places to visit, but we'll always look forward to coming home to Coron.
If you're interested in finding our how some other people are doing early retirement, you might like these posts:
David's (not me, a different David) adventurous early retirement
Andrew's (a different Andrew) FIRE with a twist