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How Much Do You Really Need For Your Retirement?

How much do you really to retire and enjoy the fruits of your hard work all your life? The answer may be a bit complicated as there are several factors and variables that you need to consider when computing or estimating it.

Before reaching that retirement goal, factors such as your financial capacity to save, knowledge of investment options, and your target year to retire should be considered.

Our lead trainer at Angat Pilinas Coalition for Financial Literacy, Alvin Tabañag, will show us the faster way to estimate the required amount of moolah for a retirement fund in this guest post today.


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Several months back I asked a group of aspiring financial planners to estimate how much a client will need for his retirement given certain assumptions. The answers I got ranged from P6 Million to more than P30 Million when the correct amount is only about P16M. The wide variation in calculated amounts stemmed from the inaccurate application of the formulas.

If these guys can get it wrong the first the time around, imagine how much more difficult it will be for the average Filipino to have a fairly accurate estimate of how much is needed to retire comfortably. There are a number of quick methods or simple rules for estimating required funds, like targeting an amount that will replace 50% to 75% of your pre-retirement income. Unfortunately, these quick methods and rules have significant weaknesses which results in estimates that are not quite accurate. That’s why I don’t use them. Instead, I made my own retirement fund calculator.

To effectively use the calculator will require some explanation. Since I don’t want to bore you with that, I just made a table, partially derived from the calculator, where you can simply look up the funds you will need for your retirement. (You can view a bigger version of the tables at

Retirement Table - Alvin Tabanag - Table 1

Retirement Table - Alvin Tabanag - Table 2

Take note of the assumptions I made in creating the tables. There are three important variables here: inflation rate, length of retirement, and the growth of your money during retirement.

Inflation is the rate of increase of prices of goods and services. Length of retirement simply means how many more years you will live after you retire. Growth of money during retirement is how much the unused portion of your retirement funds will earn every year after you retire. Changing any of the variables will result in an increase or decrease of the estimated retirement fund.

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Compare Tables 1 and 2. The difference between the two is the length of retirement: 20 vs.15 years.

Notice that if you live longer in retirement (Table 1) you will need a bigger amount. (If you don’t want to be burdened with saving for a bigger amount, one of your options is to die sooner.)

Higher inflation rate will also result in a higher required retirement fund. A high rate of growth (meaning your money earns more) will result in a lower required retirement fund.

If your estimated monthly expense should you retire today, say P75,000, is not found in the table, just add the required retirement funds for two listed amounts. For example, if you still have 10 years before you retire and your estimated monthly expenses today is P75,000 then your required retirement fund based on Table 1 will be P22,368,324, which was derived by adding P14,912,216 (for P50,000) and P7,456,108 (for P25,000). You need to have a fairly good estimate of your monthly expenses if you retire today.

You simply can’t use your current budget because it includes the following:

– items you will not longer spend on when you are retired (e.g. education-related expense)

– items that will increase in retirement (e.g. travel and recreation, medicine)

– items that will decrease in retirement (e.g. life insurance premiums)

You have to make the appropriate adjustments to your present budget so that it will be more accurate. But that’s for other article.

So, check out the tables and see if you can afford to save for the funds you need to have an enjoyable and financially hassle-free retirement. My next post will show you how much you need to save every month from now until you retire to reach your target retirement fund.

As usual I would like to end this piece with some words of wisdom from my good friend:

“Huwag magkunwaring mayaman, kung hindi ka naman totoong mayaman.” – Tata Binoy


Learn more about practical and effective strategies to prepare well for your retirement at the:

“How to Plan for a Comfortable and Worry-Free Retirement” Seminar
August 27, 2014 (Wednesday), 8:00am – 5:00pm
New Horizon Hotel, Mandaluyong City

Alvin T. Tabañag is a personal money management coach and a Registered Financial Planner®. He is a member of the RFP Institute and the Financial Planning Association (USA). He established Pinoy Smart Savers Learning Center to spread a culture of saving among Filipinos through practical financial education. Alvin regularly conducts seminars on money management to a broad range of audience; from low-income wage earners to middle-class workers, professionals and business owners.


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5 thoughts on “How Much Do You Really Need For Your Retirement?”

  1. Hi! I would like to know how you came up with the figures. I used the TVM formulas using the rates you’ve given. I’m getting different figures. Thanks. -CPA,RFP

  2. hi! would like 2 know if one’s investments in stocks through online or a stock broker can be garnished by d govt like the bir? i was told that the only investment vehicle that cnt be garnishable is thru vul insurances…is this true! are mutual funds & uitf garnishable also?

  3. Malaki laki pa pala kailanagan ko, yung mga hindi pa financially literate must read and understand this, kasi some people go through their lives without thinking their retirement, and just hoping for handout when they grow old

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