Filipino investors are confident about their retirement prospects but many are not planning early enough, a financial services firm said.
Manulife Philippines on Monday cited data from its Manulife Investor Sentiment Index (MISI) survey, which found 83 percent of Filipino respondents claiming to have already started engaging in retirement planning.
However, more than a quarter or 26 percent begin planning in their 40s or older, the firm said. The average age when the Filipino investors start their retirement planning is 35.5 years, Manulife explained, and for those who have not yet done so, the age at which they intend to start is 41.
“With more than half of Filipino investors (56 percent) expecting to retire between the ages of 51 and 60, many may not be devoting enough time to retirement planning,” the firm said.
A 41-year-old Filipino who wants to retire at 60 only has 19 years to save enough to maintain his or her current standard of living in retirement, Manulife said.
It added that the average married couple in the Philippines faced a joint retirement duration of almost 21 years. But if one plans “to retire at 51, [it]means he or she would have just 10 years to prepare,” the firm said.
“Expenditures are unlikely to fall significantly during retirement and people could live in retirement longer than expected. Investors also need to take into consideration the effect of inflation, which erodes retirement savings by lowering purchasing power and therefore living standards,” said Ryan Charland, president and chief executive officer of Manulife Philippines.
“We encourage investors to plan for retirement early to increase their chances of having enough to support the lifestyle they want once they retire, without having to depend on family or additional sources of income’,” he added.
The survey also showed that Filipinos who already engage in retirement planning save an average of 12 percent of their monthly incomes for retirement and wealth accumulation.
They expect 58 percent of their retirement income to come from cash savings, insurance saving products and pensions; 13 percent from a full or part time job; and 11 percent in the form of financial assistance from the family.
Filipinos, meanwhile, were also found to be fond of enhancing their pension plans, with 97 percent doing mandatory and nearly two thirds or 64 percent adding voluntary contributions.
“Many Filipino investors recognize the need to supplement their mandatory pension plans to maintain their current standard of living in retirement,” said Aira Gaspar, chief investment officer of Manulife Philippines.
“We feel the most effective way to achieve this is to make regular contributions to a portfolio of investments that are diversified across asset classes that match the investor’s risk and return objectives. This approach could reduce the risk of outliving one’s retirement income by maximizing returns potential within one’s risk tolerance levels,” Gaspar said.
Of the 83 percent who have started retirement planning, meanwhile, 93 percent were described as confident — 70 percent think they will have enough to live within their means by retirement age and 23 percent think they will have more than enough when they retire.
Manulife Philippines or Manufacturers Life Insurance (Co.) Phils. Inc. is the local arm of the Canada-based insurance giant Manulife Financial Corp. Through Manulife Asset Management, the group commissions surveys and studies to assess financial literacy, conditions and status in the Philippines.