• Prepare for retirement ahead, not when it’s too late



    Do you have P1, 059,000 in your savings account today? That’s the amount you need if you eat three meals a day for 20 years with a price of P25 per meal.

    When the P2, 000 increase in SSS salary deductions was approved at the committee level of the House of Representatives earlier this week, the most common reaction I got from people I know was “Increase in deductions? What’s the use if there’s no significant increase in our pension when we get old?”

    These kinds of reaction are just triggered when a salary deduction is on its way because most Filipinos are looking forward to the SSS pension to finance their retirement. Close family ties result to parents giving subsidy to their adult children for housing, transportation, and leisure at the expense of money that they could use to enjoy their retirement. For millennials, retirement funds are not started upon graduating but until retirement is just around the corner because of having SSS as a safety net for retiring as one of the main factors.

    The regional survey conducted by The Global Aging Institute and Pru Life UK showed that from the Filipinos they talked to, 90 percent expect themselves to retire poor due to lack of savings and little support from the government. What is interesting here is that 66 percent of them believe that the government should be the main source of retirement pension and people who believe that their own funds should sustain their retirement.

    Will P16, 000 maximum pension be enough to live a comfortable life in retirement given the projected increase in healthcare expenses upon entering that phase? Note that some people under the SSS pension program can get a lower amount than this. Health care is not cheap in the country and not wholly subsidized by the government.

    Most millennials think that because retirement is 30-35 years away, then we can slack off and not do anything about it today. Giving up today’s wants for tomorrow’s needs doesn’t seem appealing. As what Rex A. Mendoza mentioned at a seminar of Rampver Financials held months back, swiping a credit card is easier than the paperwork to start an investment. It would be natural for us to do the first because it will relieve our stress from work now and the P5, 000 spent can be earned later. What most of us do not realize is our energy now to earn is one of the factors that we can use to increase our earnings. We can earn more money but we cannot earn back time. This does not only apply to maturation of investments but also developing good financial habits like saving money and living below your means.

    Delayed gratification is a topic that falls in the easier-said-than-done category, and one which directly co-relates to retirement. I do not trust myself to develop good financial habits abruptly 5-10 years before my retirement.

    Therefore, starting early is key to preparing for retirement at my age.

    We are far from talking freely about retirement plans like how we talk about which new smartphone we’ll get. It’s a discourse that we need to start early because it’s a financial mistake that’s hard to fix once we reach old age.

    Kristel Silang is the content manager of MoneyMax.ph, a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.



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