If you're reading this article, you must have been working and saving up for years, and now retirement is finally in sight. Or maybe you're a younger professional who wants an early retirement.
Thinking about an ideal retirement brings up images of lounging in your vacation home by the seaside or on a provincial farm. However, statistics paint a different picture. The Philippines is said to have one of the worst retirement and pension plans in the world.
According to the head of the Bangko Sentral ng Pilipinas, around 80% of Filipinos who are approaching retirement age do not have financial security for the expenses of life after their employment years. This was supported by a survey by the Philippine Statistics Authority, which determined that 80% of the 7.6 million Filipinos who are 60 years of age or older do not receive a pension. Currently, the average life expectancy will be 72 years old in 2023.
Importance of Retirement Planning
Every retirement plan is different. You must make careful preparations if you don't want to experience the same problems mentioned. The earlier you examine your income sources, the more time you have to make any adjustments before your retirement date.
Planning for retirement actually rests with the employee since the government and corporate pension plans can fall short of meeting post-employment financial demands. This indicates that you should begin your comprehensive retirement plan at the young age of 30!
Do you think it seems illogical? You still have 30 years of active employment. Why be concerned about something so distant? Well, this is the time when you have the financial independence and freedom to think about your retirement savings. You should not put off retirement planning until the last minute.
What issues then need to be resolved before old age begins to set in? Here are the factors to consider when planning for retirement to aid in your efforts toward reaching your retirement goals.
- Calculate your retirement income.
Calculate the amount of fixed income you can receive from the Social Security System and pension programs offered by your employer. The remainder of your retirement accounts will most likely come from your monthly income, savings, and investment accounts under a retirement plan, as well as any income received in retirement.
The rule of thumb says that you should be able to spend 4% of your retirement portfolio each year in retirement in order for your assets to last throughout your lifetime. Decide how much money you would need to live comfortably without a job. You can use a retirement calculator that takes inflation and the projected cost of living into account. You can also multiply your current monthly spending by 25 to get an idea of your future demands. With inflation, this amount should nearly cover living expenditures for ten years.
2. Cut down on expenses.
The more money you save, the less money you spend. Make some lifestyle adjustments and add more to your retirement fund. Keeping tabs on your spending habits now will help you transition to retirement without difficulty, even when your cash flow is already tight.
You won't feel as though your status has suddenly decreased due to a lack of funding. Whether you are employed or not, you are simply continuing the same lifestyle you have always enjoyed.
3. Pay off your debts.
Even though you want to save more money for retirement, you shouldn't ignore your debts. It's best to pay them off so that you'll have less financial stress during your retirement years. If you're having trouble paying off your debts, you can start by paying off the small loans. Ticking one loan off your list at a time can inspire you to continue eliminating other debts until you finally pay them off.
4. Consider future medical expenses.
One of the most important aspects of living a good life is being healthy. You should start taking good care of yourself if you want to live healthy and longer in your retirement years. It's time to take maintaining a healthy lifestyle and getting regular checkups more seriously.
As they say, prevention is better than cure. There is no justification for skipping regular checkups and preventive tests, even if you feel healthy now. Developing good habits, such as exercising, eating healthy, and getting enough sleep, can affect both your physical and emotional wellness.
In addition, a retirement budget can easily include a sizable portion for medical emergencies and expenses. As you age, your non-routine healthcare costs are likely to increase. You may also want to consider purchasing long-term healthcare insurance. The premiums paid will be lower, and insurance companies are less likely to turn you down if you purchase your insurance now rather than waiting a few years.
5. Start making investments with your money.
People claim that the smart person makes money work for them, whereas the common person works for money. Once you have enough money saved, look into investing it to increase its value.
Apart from starting a business or working a side job, this can be achieved with the help of other financial planning tools, like life insurance. Most of the time, your life insurance agent or insurance company can also provide you with investment opportunities.
Although it may be tempting to avoid investing in stocks to lower risk, the growth that stocks may offer is still crucial at this point in your life. Think about keeping a balanced portfolio of stocks, bonds, mutual funds, and other assets that meets your risk tolerance, time horizon for making investments, and liquidity requirements.
6. Think about consulting a financial advisor.
You can make some decisions regarding the retirement planning process more effectively if you seek professional guidance. A certified financial planner can assist in assessing your particular situation and putting the appropriate amounts of protection in place, whether it be through long-term care insurance, disability income insurance, or auto, house, and life insurance policies. With adequate security, you may concentrate on the enjoyable aspects of making future plans without having to stress as much about all the "what ifs" that might arise.
7. Plan your future residence.
Your future expenses may be significantly impacted by where you retire. You might think about relocating to a less expensive, smaller home while remaining in your current town or city. On the other hand, you can decide to move to a cosmopolitan city, a move that might require you to cut costs, or choose to live in a region with high living expenses and taxes in order to be close to your grandchildren.
You can also invest in a Vista Residences condo for retirement since it is an increasingly popular choice for retirees who are having trouble keeping up with a detached property but aren't quite ready to move into a retirement home. In addition, the independence and security that come with a condo lifestyle are also ideal.
Plan carefully and set reasonable post-retirement goals to ensure that time is on your side and that you have the resources to enjoy the kind of retirement you have always desired. Know that you are not alone, and there are steps you can take to enhance your retirement plan, even if you have already started saving and investing or haven't yet.
You don't have to do something worthwhile every second of the day, so pace yourself. Make a few important choices and let the rest work themselves out. Above all, retirement marks the beginning of a new stage of life and an opportunity to reflect with pride on all of your greatest accomplishments in life.
-1.jpg)
