How to prepare for retirement?

During our honeymoon, my wife and I had an opportunity to visit Boracay. Staying at the beautiful island, we came to a point of discussing about retirement. We realized that our country is very rich in natural resources and we became fascinated of dreaming to visit the different islands around us, one beach at a time as we grow old and maybe after the pandemic is over. We visited the place few days after the island just re-opened after 6 months of rehabilitation last 2018. I had a picture in mind on how I would like to prepare for our retirement since we love to go to different places in our country and enjoy our moments with our family.

As a financial planner, I was given the privilege and calling to educate our countrymen on how we can prepare for retirement. The Philippine retirement system ranked the 4th lowest in the 2019 Melbourne Mercer Global Pension Index (MMGPI).

With this statistics, we continuously share the steps that we can do to somehow change the trend 20-30 years from now. After all this can be part of nation building and will help our country become more progressive.

The question for us to answer is how can we prepare for retirement? Sharing some of the learnings that I got over the years.

1.??????Set your goals

Find ways to finance your goal by either passive income or investments. It could be through rental properties, investments or mutual funds. You can still choose to have active income during your retirement from your full time job by doing freelancing or small business ventures. Even though you just started In your work, you can allocate a portion of your income that will go to your retirement fund. Try to list down the lifestyle that you want upon retirement, do you want to travel, how much health care funding do you want to set for your golden years to avoid depletion of savings/investments?

2.??????Use a reasonable amount of inflation

Inflation will affect the cost of our money every year. This is the reason why our grandparents will always say that P50 during their time is already a big amount. 4-5% is a good number not too high to demotivate but not too low to deflate your funds.

3.??????Being disciplined is the biggest challenge towards attaining your goal for retirement. There should be a balance between enjoying your money now and saving it for later. It’s not how good you are when investing but how disciplined you are some people have multiple accounts, some have one only. Money is behavioural and do what works best for you.

4.??????Diversify your investments, diversification is still the best way to grow your money, you need to be able to balance your investments with the risks and returns. Knowing your attitude towards risks will allow you to choose from various types of investments. If you are still in your 20s you can still take more aggressive funds such as Index or Equity funds which are invested in the stock market. Once you reached your 50s, you may consider placing your funds in more conservative funds such as the bonds or money market fund since the years before your retirement is now shorter, volatility can’t be tolerated that much.

5.??????Find the options

Conduct a research or consult a professional on the tools that you can use or take to achieve your retirement goals. Try to conduct a financial check-up so you can identify where you are right now and the process that you need to take in order for your to achieve your goals.

6.??????Start early

We can start preparing once we receive our first salary. This is the ideal approach but then always remember that if are not able to start yesterday, the best time to start is today. No matter how small it is, it’s better than starting too late.

7.??????Be consistent

Consistency will allow us to grow our investments though we may start mall, in due time, we will see the growth that we can achieve.

8.??????Be in faith

Faith is the assurance of things hoped for, with this combined with our practical steps, we can still place our confidence in God’s provision while doing our part as well.

As much as we plan ahead, I would like to close with this verse, at the end of the day, we will do it not by our own efforts but also with the wisdom from God and His people. For me combining the spiritual side and practical steps in financial planning is essential. In today’s changing world, we need to adapt and know the strategies on how we can grow our finances so we can bless more people specially our family. Now is the time for Filipinos to rise in the aspect of Entrepreneurship. The digital economy gave us open doors to earn while at home. Businesses such as e-commerce, freelancing services had a tremendous growth last year. Try to list down your skills and strengths, from there you can have a side income to help you in having additional cash flow so you can prepare for your retirement. Retirement is the longest holiday of our lives, it can give us happy memories or not depending on how we prepare as early as we started earning money.

I would like to share this verse, as we plan ahead, it is also good to rely on God’s world so we can have the perspective that our source is our creator, no matter how many limitations we might face, we can still be confident and press on towards our goals. Aside from growth in our finances, peace of mind is also a big factor so we can do things without worrying too much but with fruitfulness and fulfilment.

Jeremiah 29:11?For I know the plans I have for you,” declares the LORD, “plans to prosper you and not to harm you, plans to give you hope and a future.