Tips on How to Prepare for a Worry-Free Retirement
Retirement is often the first major transition faced by older adults. Depending on the reason for retiring, its effects on physical and mental health vary from person to person. About one-third of retirees usually have difficulty adjusting to post-work situations, such as reduced income and new social roles and entitlements. Needless to say, while their regular income stops, their living expenses continue.
The Philippine Statistics Authority released a report that of the 7.6 million Filipinos aged 60 and above, 80% don’t receive a mandatory pension. In addition, it also revealed that the share of social security benefits—including retirement and survivorship pensions, sickness, disability, death, and other related allowances—to gross domestic product also remained relatively low at around 2 percent from 2012 to 2017.
With these figures, Filipinos who do not have social security benefits yet need to look for other tools and start planning for their retirement years. Here are seven tips to ensure a worry-free retirement.
Tips to a worry-free retirement
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1. Organize your current finances
Check your assets and liabilities so you can determine how much preparation you need to make. If you are aware of your liquidity, then you can choose more options to grow your assets. Aligning your present and future liabilities with your assets can ensure that you have sufficient money for your needs.
2. Set your time table
Determine at what age you want to retire. In the Philippines, the government and most private companies allow an optional retirement age at 60 and a mandatory retirement age at 65, except in the military service, where optional retirement is after 25 years of service.
For OFWs, Seafarers, businessmen, and those in other lines of work, they can follow the same timeline or choose an earlier or later age bracket to retire. What is important is that you understand the pros and cons of your retirement age. For instance, a medical practitioner may opt to retire later than age 65 due to a demand or a need for a certain specialization. In most cases, professional fees for this example could also be higher. On the other hand, some OFWs might want to spend time with their families and choose earlier dates.
3. Be conscious of your health
Keeping a healthy lifestyle will definitely have an impact on one’s health. As they say, prevention is always better than cure. Being serious about your health practices, getting regular checkups, and taking other preventive measures will lessen your risk of developing critical illnesses and other health problems. Such diseases could affect your retirement funding due to the high cost of treatment and rehabilitation.
4. Pay your debts
Most debts have corresponding interests. This implies more expense. If the list is long, then you need to strategize first and choose which solution will effectively work for you. You can check out the 3 ways to pay off your debt, namely: the snowball method, the debt avalanche, and debt consolidation.
5. Create and follow a consistent spending habit
While you are still working, examine your spending habits versus your income. As a principle, one should spend less than what is being earned. In this way, you will have extra funds that you can save and invest for your future needs. Of course, you can reduce your expenses without sacrificing the lifestyle that you prefer. For instance, you can plan a vacation early so you can get a lower price for plane tickets, hotels, and other fees, rather than being spontaneous and cram during holidays when prices are at an all-time high.
6. Let your money grow
There are many tools on the market today where you can place your available money and let it grow over time. For instance, Sun Life offers life insurance options to meet varying needs. You can get a VUL policy and choose *MyFuture Fund as the mutual fund option to supplement your VUL life insurance. You can also consider investing in Pag-IBIG MP2 or even diversify your portfolio by considering buying real property. Do research on what would work for you.
7. Get professional financial advice
For those who feel that they need professional help in making the right retirement plan for them, the easy way is to get a trusted and experienced financial advisor. Ask for referrals from your relatives and friends who have used the same services. Or you can check the nearest similar offices for accessibility.
Everyone has the capacity to make their retirement year as comfortable as they imagine it to be. But you have to start planning it today. Take the necessary steps and make it happen.
