It’s Never too Early to Plan for Retirement

I started planning for my retirement when I was 23 years old. I’m not sure what made me realize that- maybe it was Bo Sanchez’s book or the financial advisors from SunLife- but I’m so glad I did. It’s never too early to prepare. You can always make more money, but you cannot make more time. And when it comes to planning for retirement, time is the ultimate tool.

Unfortunately, many young people (and people in general) don’t even consider retirement savings.

From an article I’ve read, out of 100 retirees in the Philippines, 45 of them still depend on their relatives for their daily expenses, 30 of them depend on charitable institutions to survive, 22 of them continue to work and only 3 of them are financially independent.

In my line of work, I’ve dealt with a lot of retirees. A majority of them just depend on a SSS Retirement pay, a government-sponsored monthly pension plan. Since these retirees were not professionals but just farmers or sugarcane factory workers, so their monthly pensions usually only ranges from Php 1,250 to Php 5,000. It’s like living on Php 150 a day, and that just not enough to put food in the table, to buy medicines, to pay for electricity and water. In most cases, they could not depend to on their children because they would most likely have families of their own already and/or not financially well off.

The trouble is, these retirees didn’t have the luxury to fully learn and understand the basic principles of money management. Retirement planning is unheard of back in the past, so I couldn’t not blame these people for their lack of retirement preparedness.

So, let me ask you, do you want to be financially prepared when you retire?

I don’t know about you, but I SURE WANT TO BE financially prepared when I retire! I don’t want to continously keep working when I’m already 60 years old. I don’t want to worry about where to get money to spend for my medical bills or doctor’s consultations. I want to be able to spend time with my future children and grandchildren and not have them listen to me having any financial and health complaints. I want to be able to enjoy my remaining golden years in this world.

Anyways, my advice to you, while your still young or while you still have time in your hands, START planning NOW for your retirement. All we need to do is to set aside portion of your earnings (even if it’s as small as it is) and let it grow. Because, by continually putting off retirement savings means throwing away that precious, unsalvageable resource- TIME.

If you start saving for retirement at age 25, for example, setting aside about Php250 of your monthly salary, or Php3,000/year, you’ll have around Php842,000 in 40 years, assuming an 8 percent growth annually.

But if you wait just ten years, until you’re 35 years old, to implement the same savings strategy of contributing Php3,000/year to your retirement accounts with the same rate of return, but for just 30 years, you’ll only wind up with Php402,000- that’s less than half!

Anyways, in the last few years, I’ve been putting myself through self-education by reading more and more finance books, websites, and magazines. During that time, I’ve been able to put a number of basic accounts into place.

Savings Account: This is where it all begins. I place my earnings here and I had automatic debit arrangements set up to move portions of my money to my money market accounts and investment accounts. Whatever is left, is my FUN fund. I made sure that I had a debit card with it, so I can easily track my spending.

Mutual Fund: This is where I have my retirement funds growing. I’m still young, have time on my side and I have a moderately aggressive portfolio. Most of my money is in equity (stock) funds.

Money Market Fund Account: This account acts as my emergency fund. My goal is to get to about 9 months of living expenses. I opened another MMF where I place my annual travel fund. There are minimal costs involved setting it up, but it offers a higher return compared to a savings account.

Individual Stocks: I’ve allocated a small amount of money to invest in some individual stocks. Though they offer high growth potential, these are the riskiest investments I have made to date. Until I have better understanding of the market, my investments in individual stocks will be minimal.

Throughout the process, I’ve realized that it isn’t just about retirement, but general financial planning. I’m not fully confident that I’ve set things up the right way, but it’s a start. I guess I have to keep educating myself more.

Anyways, START planning your retirement NOW!

Time is just as important as money, so don’t delay.