A Guide to Retirement Planning in the Philippines

According to studies, Filipinos typically don’t have enough money saved for their senior years. Many Filipinos have the propensity to place the least importance on retirement planning. Frequently, money is spent on current expenses rather than long-term planning.  

However, it is important to start planning for your retirement as soon as possible. Saving and investing money now can yield benefits for you in the future. Your returns will be bigger because compound interest can increase your savings. Early planning for your life goals also enables you to identify the financial resources you’ll need to acquire to live comfortably upon retirement.  

As a young professional, you are probably building wealth so you can get a home, a car, or fund your family’s expenses, but the little you set aside now for your retirement can make a big difference in the future.  

Important Steps for Retirement Planning to Protect Your Future

1. Set early retirement goals

Achieving long-term financial security is rooted in your ability to set goals and take purposeful steps towards them. Setting your retirement objectives involves asking yourself when you intend to retire and what resources do you want to have upon retirement. Setting goals as early as possible will help you make career and financial decisions that are in line with them as you become older.  

2. Pick a good retirement lifestyle

Knowing how you will live your life upon retirement is crucial since it will ultimately define the amount you will need to spend in the future. You need to find ways to generate more money or start saving up early if you want to go on vacation and tick things off your bucket list later in life. 

3. Acquire insurance to safeguard your revenue

Having a safety net in place is one of the best strategies to ensure a happy and comfortable future. Some insurance plans allow you to receive premium protection while earning money through an investing component. 

4. Plan your strategy based on your time frame

Your strategy will be built upon your current and ideal retirement ages. Younger people are more willing to take risks since they have more time to recoup poor investment decisions.  You can choose the tactics that will be most effective for you by being aware of your time horizon. 

Now that you know the basics, you can start looking at outlets where you can build your retirement fund. 

The Philippines’ Top 5 Retirement Fund Building Sources

SSS

Private companies usually have retirement benefits and policies. If you are working in one and you plan to stay for a while, it is important to ask your manager or HR about it so they can help you calculate the amount of your SSS pension.  

Personal Equity Retirement Account (PERA)

No matter how much money you receive from a pension plan, it won’t be enough to pay for all your future obligations. Here in the Philippines, banks usually offer PERA, an investment outlet that offers several tax advantages. With PERA, you can increase your retirement savings by taking tax-free withdrawals from your investments once you turn 55.

VUL Insurance

Insurance plans nowadays include investment benefits in addition to coverage for death, illness, and disability. Purchasing a variable unit-linked, or VUL insurance plan will be among your finest investments if you desire to be protected and at the same time earn passive income. 

Investing in real estate

Real estate is a very profitable investment, whether it’s a little structure in the city or a rest house in the province. Renting out your house or becoming a landlord of a property will help you establish a passive source of income during your retirement years.

Mutual fund investments

Mutual funds can be wonderful investments if you’re thinking long-term. These financial vehicles may eventually produce larger profits compared to conventional bank accounts. For starters, mutual funds can be challenging to understand, but taking time to research or reach out to investment advisors can help you gain the knowledge you need and understand the risks related to investing.

With a well-kept plan, you can have the retirement you have always dreamed of!

Even if retirement may not be on your mind right now, you should nonetheless start planning for it. Along with enabling you to live comfortably, early preparedness will increase your flexibility during emergencies. Overall, the good news is that by making a few simple adjustments—such as working a few more years, saving a little bit more each month, and establishing some healthy lifestyle habits—you can end up with a retirement that is considerably more pleasant. 

Send us a message to speak with one of our Investment Specialists for advice on how to prepare for and save for retirement through mutual fund investments in the Philippines.