How to Plan and Save for Retirement in the Philippines

Have you started? How much do you need for your retirement in the Philippines?

Good news and bad news…

Life expectancy for people living in the Philippines are have increased over the years. It is projected to increase to 79 years old in 2050. This means that if you plan to retire at the age of 60, you will have plenty of days to enjoy.

But living longer means you have to start figuring out your retirement savings plan. Do you even know where to start or how much you need to spend your retirement life without working and worrying for money?

Lack of Planning for Retirement in Philippines

Retirement planning is absolutely essential if you want to achieve the lifestyle you want in your golden years. It involves determining how much you need in order to retire comfortably, identifying the best ways to accumulate savings as well as making decisions about how you live your life today.

Sadly, many Filipinos are not planning adequately or early enough for retirement. One of the reasons being we never realized or learned how to plan for retirement. The SOLAR or the Sun Life’s Study of Lifestyle, Attitudes and Relationships, a research sponsored by Sun Life Financial-Philippines, highlights that out of 100 Filipinos who are at age 65, ONLY 2 are financially independent.

Many people assume they can hold off saving for retirement and make up the difference later. But this can be a costly mistake. The sooner you plan for your retirement, the easier it will be for you to accumulate enough savings due to the longer time period. Start saving as much as you can, as soon as you can. The earlier you start, the longer compounding can work for you. START NOW!

For example, a 20 year old who saves Php 1000 a month until age 65 and earns exactly 6% on saved funds annually would have accumulated around Php 2,750,000. But a 40 year old contributing the same amount each month at the same earnings rate would have accumulated only Php 693,000 by age 65.

So, how much do you want to see in your retirement pool? Is Php 5-million enough for a good lifestyle? How about Php 8-million or may be a Php 10-million? You can figure it easily by looking at your present lifestyle, circumstances and income. Always remember, you’re never too late to save for retirement.

How to Plan for your Retirement in the Philippines

Step 1: Determine your Retirement Age.

It will give you an idea on how long you have to prepare building your nest egg for retirement. For example, if you are 30 years old and you plan to retire at 60 years old, hence, you have 30 years to prepare for your retirement fund. Take note though that the idea is to save as much as you can for your retirement fund, so starting earlier than 30 years old obviously has its huge advantages.

Step 2: Calculate How Much you will Need for Retirement

Use your current expenses for your future base level of expenses then incorporate inflation of 4%. This number depends on variable factors such as your desired kind of lifestyle and even unforeseen events like illnesses and medical expenses in the future. For example, you project a monthly expense of Php 20,000, therefore in 30 years the fair value will become P64,868 using the formula “=(FV(interest rate, number of annual payment periods, payment made each period, present value)” or “=FV(0.04,30,0,-20000)”. Alternatively, you can use the future value calculator below.

Then, let’s say based on your determined retirement age is 60 years old and the expected life expectancy is 79 years old, you have about 19 golden years of retirement. Simply, multiply the number of retirement years and your annual needs.

19 years x (Php 64,868 x 12 months) = Php 14,789,904

To summarize, let’s say based on your current monthly expenses of Php 20,000, in 30 years you will need at haveleast Php 14,789,904 to live comfortably for the next 19 years of retirement.

Step 3: Build your Retirement Fund.

Now that you have determined the amount of retirement fund that you’ll need, the next step is to build the fund by making your money work harder from now on. Building a retirement fund entails more than just saving money in the bank. You need to grow your savings by investing regularly. Look for the right investment instruments (like stocks, mutual funds and UITFs) that can best help you reach your desired retirement goal.

Step 4: Periodically Review your Retirement Plan.

It is important that you review your retirement plan on a regular basis. Make necessary adjustments if needed. Retirement planning is a lifelong process and it is highly possible that life changing events may happen unexpectedly. Do not hesitate to tweak your plan to match your current situation.


Remember, retirement planning is a long term process that needs your utmost discipline and commitment to effectively implement it. Start saving today, even if just a little! Look for investment options to multiply your funds. It will be helpful if you can also consult an expert or a registered financial planner to assist you in developing your investment plan. Take advice from financial experts and grow your funds for a better, secure future!

photo credit: Let’s go back to the past via photopin (license)

Leave a Reply

Your email address will not be published. Required fields are marked *