Based on several studies, most Filipinos never seriously plan for their retirement. Most often they think about it later only in their working years with SSS and GSIS pensions plans in mind. And ironically, many also rely on their kids as part of their retirement plan.
We always dream about how we should spend the rest of our golden years. It is there right inside our hard small skulls most of the time. Which makes retirement one of the most important parts of our lives. As much as possible we want to enjoy our retirement years in simple and comfortable lifestyle.
This why it is very important to plan everything to achieve whatever goals we have. Planning for retirement requires long term vision, discipline, and commitment. One also has to learn how establish funds, invest it in placements that grow to achieve the needed amount for retirement years, and preserve them in order to not derail those original plans.
(Save and grow your money while you are still an OFW!!! CLICK here!)
This process is very hard for most people, making all these tasks become reasons for not thinking about retirement planning. But one should remember that if nothing is done, consequences will be really undesirable when that future event comes.
There are several steps that OFW’s must take in order to successfully plan for retirement. The following should be asked:
1) When do you plan to retire?
Do you plan to retire at 60 years old? If so, then you should start saving and building your retirement fund at least as early as 40. This is to assume that you believe you can live by yourself and for yourself until the age of 80.
BUT, bear in mind that you don’t have to wait to reach 40 in order for you to start saving.
Save and invest as early as possible so you can retire earlier as well.
2) How much do you need for your retirement?
Our friend Alvin Tabanag, a Registered Financial Planner of the Philippines, wrote an article for us and gave us concrete samples and computation on how much one needs for retirement.
According to Alvin, there are three important variables in the computation: 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.
Visit this article to get your numbers.
3) How to build your retirement fund?
After determining your needed amount for your retirement, you should now know how to grow your limited resources and current income. Depending on your age and target year of retirement, you should learn how to invest in various financial instruments such as stocks, fixed income securities, and pooled funds.
In our group called the Truly Rich Club, we highly encourage young people to invest in the stock market or equity funds (via mutual funds or UITFs) in order to achieve their target time and financial goals for their retirement.
We believe that these instruments are the best vehicles to grow money for long term. Remember, savings accounts and time deposit products will not give one the same yields or returns in the long run.
Unfortunately, many Filipinos believe that saving in bank accounts are enough placement to fund their retirement years. Think more than that.
4) Where to get your savings?
The best and reasonable source for building your retirement is of course, your employment or business income. The simplest advise we always give is that one should save and invest at least 20% of the periodic income.
Another way is to increase cash flow by looking for multiple sources of passive income or starting a small business based on core skills.
5) Should my retirement plan change from time to time?
Definitely. Plans change. Circumstances change. Everything changes along our life’s journeys.
Which is why it is required that we review our retirement plans regularly. Check for needed adjustments or re-aligning of goals and resources. Never be scared to face changes and adjust your plans accordingly. You are in for the long haul!
Retirement planning is a long term process that requires great discipline and commitment. One should also have a mindset of being proactive and productive during retirement years in order to contribute to the wellness of society.
Serving others should not end when your first retirement year comes. Dream for more and pursue the things you love to do.
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Ofw planning to retire next year.Pls provide me some good ideas how or what i can do with my little gratuity money
Thank you
Hi Jo, please email me at burngutierrezblog@gmail.com so I can get in touch with you soon.