Can you afford to live in the Philippines in 5 or 10 years time?

The purpose of this topic is to help understand what may impact on the amount of money you have to live on in the Philippines.

The central bank of the Philippines wants the inflation rate to be between 2% and 4% that should not be a big surprise for anyone.  But now inflation is up to 5.7% and forecast to stay around 5.5% next year.  Inflation rates in the US is 2.9%, the UK 2.4% and in Australia 1.9%

So with that in mind if you are lucky enough to get a pension from your country of birth, it will/may be linked to the inflation rate in your home country.

What does that mean for you:

If your yearly pension/spending is $50K
And your pension goes up 2.5% per year
In 5 years’ time you will get $55K

With the current inflation rate in the Philippines at 5.7% and expected to be 5.5% next year and then for every year after that it is 3%  You would need $59k per year, not the $55k which you may get from you government, to live the same live style as you do today.

The above is based on the PHP giving you the same exchange rate in 5 years time as it does today!

If the PHP gets stronger and instead of buying 38php for 1 AUD you only get 34php for 1 AUD you will need your pension to increase by another 12%.  Of course the PHP may get weaker and you will be able to buy 42php for every 1 AUD, then happy times ahead.

What will happen if inflation stays around 5% and the PHP gains strength?  Will you stay here in the Philippines or go to another country or go home?

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