You don’t need a large salary to begin building your retirement fund. I understand that it’s extremely difficult to save for retirement when you are only earning a small salary, but that doesn’t mean you can’t save money for a comfortable future. You have to realize that if you don’t plan to save now, it’s going to be even more difficult to earn/have money in your old age.
A Surprising Formula for Success
Many financial planners suggest investing a percentage of your income – like somewhere between 10% to 15%. For this post, what if we break it down into a number that’s easy for everyone to relate to—a figure that could easily cover a dinner out, a movie ticket or a Starbucks coffee?
… A Hundred Pesos (PHP 100) a week.
Let’s see what kind of future Php 100 a week could afford you if you invest in good growth stock mutual funds. That would be merely 5% of a Php10,000 salary.
Assuming a 5%-8% return,
- In 20 years, you could retire with Php 170,000 to Php 240,000.
- In 30 years, you could retire with Php 340,000 to Php 590,000.
- In 40 years, you could retire with Php 620,000 to Php 1.4 million!
Keep in mind, this example doesn’t take salary increases into account. You’re not stuck at today’s income. Work hard for your money and you’ll get raises along the way. Imagine how your retirement fund could look if you increase your contributions as your income grows!
Don’t Have 40 Years to Invest?
That’s okay! It is never too late. It just means you’ll need to save more money and give it everything you’ve got in the time you do have. Pick up the pace and add oomph to you retirement savings by bringing home a little extra bacon (like having part-time work or sideline businesses). Aim to be financially secure by being debt-free with a fully-funded emergency fund. If you’re still unsure of what to do, take time to sit down with a financial planner to take a look at your options.
Remember, small daily savings can add up to a long term fortune. Think of planning for retirement as a journey. The key is to start early, save regularly, and increase the amount you save as your income increases.
photo credit: Kikki K Watermelon via photopin (license)