08/02/2022
“I’m only xx years old, too early to think about retirement”
Aminin, nasabi mo na din ito noon.
Kung matagal ka nang nagtatrabaho, I’m sure you are also looking forward to retirement.
After all those years of grinding and hard work, retiring would mean end of the tedious 9am-to-6pm routine, traffic, overtime, stressful work environment, demanding boss etc. Pero it would also mean end of income. And as we all know, only the work and income stops during retirement. Tuloy tuloy pa rin ang gastos at bills habang buhay tayo.
So, magkano ba ang enough retirement fund?
The goal is, continue living as if we still have income.
Maintain lifestyle kumbaga.
Average lifespan of a person is 80 years. Typical retirement age is 60 years old.
So generally it means, we have 40 years to work and save up for that remaining 20 years of no work.
Here’s an example with a basic computation excluding inflation and other factors:
Paul is 20years old, earning Php 20k/month.
He will need to have at least Php 4.8 million to retire at age 60, so he can continue the same lifestyle with a Php 20k/month budget until age 80,
🔹Paul just need to start saving at age 20, setting aside half of his current income which is Php 10k, until age 60.
🔹What if he only started saving at age 30?
Paul will have to increase his retirement saving to Php 13k/monthly instead of Php 10k to make up for the previous years.
🔹What if he only started saving at age 40?
His retirement fund will only last him until age 70. He might rely to his children to support his needs for the next 10years.
🔹What if he only started building his retirement fund at age 50? His retirement fund can only support him for the next 5 years. Paul might need to extend working and delay his retirement.
If the retirement fund is insufficient, one might need to lower his cost of living.
Ibig sabihin, kung kumakain tayo ng 3 meals/day today, by the time we retire, we will have to lessen that to twice or once a day, because we don’t have enough fund to maintain our previous lifestyle.
And if we didn’t prepare at all, we might be forced to continue working until we die.
Here are other important factors to consider:
❗️Prices increases every year. Lahat nagmamahal.
❗️Average inflation is 4%. And inflation affects the value of your money. Php 1million today will not have the same value after 20 years.
❗️As we age, medical expenses are expected to increase. May mga maintenance na ang Seniors which will be included in the monthly expenses.
❗️Emergencies and confinement can also drain our retirement fund.
❗️Typical household usually have one spouse working, and the other one staying at home. It means retirement fund of one will have to support the needs of two.
Ikaw ba, do you have a retirement plan? Do you think it’s important to prepare for it? So kailan ba ang right time to start saving for it? And how can we protect our retirement fund from inflation?
FACT: Did you know, 78% of Filipino retirees are relying to their grown children for financial support. And only 8% are financially prepared for retirement. This is why is a never ending cycle for majority of Filipinos.
Learn how to effectively save and grow your retirement fund, so you can look forward to a financially-secured retirement. Send us a message today.
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