Your Ultimate Guide to Retirement
Photo c/o IamExpat.de
Preparing for retirement doesn’t happen overnight. In fact, the entirety of your professional life is probably spent in priming yourself for this important phase that happens later. To be fully retired, you need careful planning and strategy. You need to dedicate time and commitment to prepare yourself for this period. Above all, a lot of money is required to make this phase as easy and as comfortable possible for you and for your family.
The facts are these. According to the Inquirer, a salaried Filipino needs about PHP 4 million to maintain a comfortable lifestyle during his or her retirement. In another survey, they found out that Filipinos have only set aside 3.6 months of personal savings for retirement, which is the lowest among eight other countries in Asia.
The lack of preparation for retirement probably stems from the family-oriented nature of Filipinos. Most expect their capable family members to support older family members during this period. With a life expectancy of 70 years old, children in most Filipino families can be seen supporting their elders for another 10 years or so. But is this really the only way to a restful retirement?
What is retirement?
Retirement is a phase in someone’s work life where he or she withdraws from his or her regular occupation or position. This is when you decide to leave the workforce permanently. The traditional age of retirement varies from country to country, but in the Philippines, the official retirement age is 60. Ideally, and in normal circumstances, you’re supposed to receive a monthly benefit from the government or your pension to support yourself throughout your old age.
Personal finance website The Balance says that you can call yourself retired when you have a source of income without having to work or when you do not need to earn it by working. So this can also mean that you can retire early, say, at age 30 or 40 for as long as you have enough savings or income to support yourself throughout life and you can cover all your living expenses from the age you decide to retire up until your last breath.
Why should you prepare for your retirement?
There was an old article posted from years ago that recently went viral about an author who was employed for over 30 years and had SSS contributions that fell on the upper bracket. This person was surprised to find out that he will be receiving a measly amount of PHP 4,300 as monthly pension when minimum wage is at around PHP 10,000 per month.
To put it simply, what you can expect to get from the government once you retire is quite insulting, and it doesn’t matter whether you’re an SSS or a GSIS member. You work for practically most of your lifetime and then never get your money’s worth. There are a lot of improvements that need to be implemented, but it is what it is, an allowance from the government. “Getting something is better than nothing,” some would argue. You could have placed your money in a proper retirement plan and expect a better return for your investment.
Another reason why you should prepare for your retirement is that you’re not supposed to ask your children to support you during your old age. This extremely outdated belief is causing people a lot of trouble, even celebrities, *ehem* Sarah G., so this mindset should be completely erased. Raising kids purely for economic benefit or treating your children as if it’s their obligation to support you is unfair.
For all the above mentioned reasons and more, there is clearly a retirement savings gap that needs to be narrowed.
What are the things you need to do when planning for your retirement?
Retirement planning means carefully mapping out how you should go about this phase in your life. Check out this list of practical tips to understand how you can prepare yourself financially for your retirement.
- Map out a comprehensive retirement plan. Spend some time to carefully analyze the expenses you might incur after you retire. How much will you spend on food, clothing, and health? Have you fully paid your house when this time comes? Do you have a pre-existing health condition that would cost you money? Figure out the answers to these questions and go from there.
- Consider your health expenses. Various diseases and ailments usually come with old age. Have you computed how much you would spend for this? PhilHealth benefits stop at a certain age, so unless you have a comprehensive health insurance package or unless you retire early, you would not be able to count on your health coverage fully.
- Study your social security benefits. Again, social security benefits in this country cannot be your sole resource for retirement money. Find out how much you would be getting and add that to your retirement budget.
- Invest through other means to build your retirement budget. You need to rely on other forms of income-generating investments that you wouldn’t touch until your retirement if you really want this life phase to be as comfortable as possible. For instance, you can invest on the stock market or invest on property that you can sell for a profit once you’re old. You can also get a comprehensive insurance plan from a provider. Or why not invest on alternative solutions such as becoming a lender on the Blend PH platform? Read up and do your research to find out the best investment option for your specific needs.
- Educate yourself about retirement planning. The World Wide Web provides a minefield of information that you can tap whenever you want and to your heart’s content. Read articles or eBooks on the topic and watch videos of people who can provide you with the best advice. You’ll be thankful for these resources.
How much should you save for your retirement?
Most would say that you should save up as much as you can for your retirement. However, this is vague and not as actionable as it’s supposed to be. Grit.ph suggests saving 10 per cent to 15 per cent of your monthly income for retirement, beginning in your early 20s. It shouldn’t hurt to think and plan early, but it also wouldn’t matter if you start in your mid-30s, as long as you discipline yourself and commit to the task.
What should you do after your retirement in the Philippines?
Money and expenses aside, the most important factor in a successful retirement is to stay productive and keep things meaningful. Imagine, after 40 years of waking up so early in the morning, squeezing between people in your daily morning commute, and working your ass off five days a week to provide for your family, you get to finally enjoy some freedom. This will be so different from what you’re used to, so you’re supposed to work on keeping things interesting.
One way to not get bored during your retirement is to keep teaching yourself things. Try a new craft or hobby. If you’re not technologically inclined, spend some time learning how to use new software instead of just watching videos on YouTube.
Another tip is to stay active and get outdoors. Walk around your subdivision every morning, or join a fun run. Participate in a Zumba class or simply run after your grandchildren at the park.
Best of all, enjoy your retirement! Spend time with the people you love. Take advantage of your senior citizen perks. Watch a movie for free on weekday afternoons. Enjoy your 20% off on your favorite restaurant. Live it up!