I got a wake-up call in January when I read that the projected fund life of the Social Security System (SSS) could potentially last only until 2040, as presidential spokesperson Ernesto Abella mentioned.
By then I would be 50 years old, just 10 years prior to retirement at 60. Aside from saving money and having a fund manager manage my investment, I wondered what else I could do to make sure that I’d have enough funds for myself and my future family.
Then I thought about the Personal Equity and Retirement Account (PERA) Law, allowing us to set up an account in which we can put money as a time deposit and as an investment.
According to the PERA Administrator of the Bank of the Philippine Islands (BPI), the minimum amount required to open such an account is P1,361.00, consisting of P1,000.00 in minimum maintaining balance and P361.00 in additional fees. Filipinos who have a tax identification number and a capacity to enter into a legal agreement are eligible to open a PERA account. The maximum amount per year that one can put in it is P100,000, for Filipino residents, and P200,000 for Overseas Filipino Workers (OFWs).
There are a lot of great points about getting a PERA account. Just the policy that your account cannot be withdrawn until you are 55 years old already imposes discipline, keeping you from withdrawing your retirement fund. You can deposit money into that account whenever and with whatever amount you want. The key to achieving a target retirement fund goal is determining how much you can afford to set aside for it regularly.
What that requires is a cut in your monthly disposable money so you can use the saving as a deposit into this account. Setting aside money for your retirement makes the deed unappealing while you’re doing it because you don’t get any immediate reward, but you’ve got to push onward even when it becomes hard to do. It will be harder if you don’t discipline yourself today.
Kristel Silang is the content mnager at MoneyMax.ph, a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.