Retirement is a milestone many of us eagerly anticipate, yet the thought of toiling away until the age of 60 or beyond might not align with our desires for a life of leisure. In the Philippines, the optional retirement age is set at 60, with the compulsory retirement age at 65. But who truly wants to work that long, sacrificing the opportunity to relish the fruits of decades of hard work?
There comes a moment in life when the yearning to savor the rewards of labor grows strong—be it exploring the world, retiring in a serene beach abode, or enjoying the tranquility of an empty nest. However, the ability to step away from work isn’t solely contingent on age; it hinges significantly on the state of your retirement fund. It’s plausible to envision retiring at 40 or 50 if you’ve diligently planned and saved, yet inadequate financial planning might tether you to work well beyond 65.
The question emerges: when should one commence the journey of financial planning for retirement? The resounding answer: now. The Bangko Sentral ng Pilipinas (BSP) emphasizes the importance of early retirement planning, asserting that it facilitates informed decisions concerning careers, families, and ensuring financial security during retirement.
Securing your future becomes paramount, especially when supporting a family while still earning a steady income. Consider these five top retirement savings plans that could pave the way for a comfortable life post-60 or even earlier.
- Pension Plans: These plans furnish monthly allowances or a lump sum, with the Social Security System (SSS) or GSIS catering to government employees. Mandated by law, SSS contributions are automatically deducted from salaries. Additionally, various banks and insurance companies extend diverse pension or retirement plans.
- PERA (Personal Equity Retirement Account): Similar to the 401k or Individual Retirement Account (IRA) in the US, PERA was fully enacted in 2016. Accredited banks, insurance companies, or administrators offer this voluntary retirement investment plan. Contributions up to P100,000 annually (P100,000 per married individual; P200,000 for OFWs) remain tax-free, with withdrawals available at age 55 after five years of qualified contributions, or upon death.
- Investment-Linked Insurance Plans: Offering financial protection, these plans merge investment growth with life insurance. Institutions like FWD Life Insurance provide options such as FWD Manifest and FWD Set for Life, combining wealth growth with protection until age 100.
- Investment Funds: Banks and insurers proffer diversified funds encompassing bonds, stocks, and more. Fund managers oversee portfolios, some even offering returns in US dollars, simplifying complex investment choices.
- Real Estate: Owning property by 50 or 60 stands as a vital Filipino aspiration. Property ownership appreciates in value, potentially serving as a rental income source post-retirement.
Experts advocate diversifying across multiple plans or a blend of the aforementioned strategies for sustained long-term financial security.
Remember, securing a comfortable retirement necessitates proactive financial planning, ensuring the latter chapters of life are as fulfilling and stress-free as possible. Start now and navigate these retirement options to pave the way for a rewarding post-work life.
