It is so much fun being young. All that youthful energy and vigor and all those hopes and dreams. But you know what happens when you’re having fun? Like they say, time flies a little bit faster than you hoped. Before you know it, you are in your 40s or 50s contemplating retirement.
Not to be a party pooper, but you are responsible for your own future. Are you ready? A global survey found that 65% of millennials are worried that they will run out of money in their twilight years. In the Philippines, millennials are very optimistic about retirement with 97% expecting to lead the same lifestyle or even better. However, Pinoy millennials are not saving enough. According to a 2017 survey of an insurance firm, only 7% have a monthly savings plan while most save up or invest irregularly. Filipino millennials also get caught up in the present and believe in the YOLO (you only live once) mantra. Nothing wrong with that, but if one YOLO’s too much without thinking ahead, retirement could be truly daunting.
But don’t push the panic button just yet. Retirement shouldn’t scare you. First things first: know the realities of retirement and what investments you can start now to be prepared for it.
Beyond pension: Benefits are aplenty
In the Philippines, there are about seven million citizens aged 60 years and up. The retiring population is about to get bigger when it is your time.
You would be glad to know that there are laws assuring seniors of extensive benefits and coverage, making retirement in the Philippines to be not such a bad thing. It is best that you are aware of these now so that you know what you are entitled to in the future.
Let’s start with a pension. If you are not yet a member of SSS or GSIS (for government employees), you better enroll and start remitting now. Companies usually automatically deduct around Php100 to Php500 worth of contributions of employees every month, but if you can afford it, you might want to increase your contributions now to have a bigger pension in the future.
On top of this, seniors are entitled to a 20% discount on food, medicines, transportation, and soon, domestic travel. There’s also mandatory health coverage.
Most retirees depend on families. Don’t be one of them
Not all retirees have beachside houses or can afford to travel the world. This is not the movies. The picture of Philippine retirement isn’t so rosy, with 45 out of 100 retirees still dependent on their relatives for daily expenses, while another 30 depend on charitable institutions.
If you refuse to be one of them, you have to amp your savings strategy now. Millennials save and invest irregularly: when they feel like it (28%), based on market movements (21%), save lump sums once a year (15%) or every few years (11%), and don’t save at all (10%). Millennials need to have a whole new attitude towards finances. Think twice about big-ticket expenditure and live below your means. Stay away from credit cards and debt. Make savings a non-negotiable item in your budget.
Real estate value increases as you age
Just like wine, real estate gets better with time. Real estate is one of the investments that are sure to increase in value over time, unlike gadgets or cars. A Php2 million condo now will double or triple in value by the time you retire.
While renting may seem more convenient for millennials, it is also money down the drain, if you think about it. Owning a property truly does require responsibility but it pays off really well in the end. There are condominiums being sold at easy payment terms. There are also rent-to-own condos with reasonable down payment schemes. Condos are a great investment opportunity because of the growing condo rental market, boosted by professionals who want to live closer to work. Rentals go around Php20,000 a month for a studio unit, even more, when furnished or in a prime location. Rental payments can cover your monthly amortization and before you know it, you are a proud owner of a unit, thanks to your renters.
Some retirees still work (and not because they enjoy it)
In the Philippines, 22 out of 100 senior citizens continue to work, most of them because they don’t have a choice. But you do. You can make that choice now.
If you don’t want to be working during retirement but still want to earn money, you have to start looking into passive income. Passive income is money that flows on a regular basis without requiring effort to create it.
Real estate is a kind of passive investment that generates long-term returns. With reliable tenants, condo rentals look really attractive. Investing in stocks, mutual funds, and bonds will also pay well in the end. For just Php5, 000, you can own stocks of a major company now.
Health is wealth, especially during retirement
A survey revealed that 68% of Filipinos worry that their health would deteriorate when they retire and healthcare would be unaffordable. You should explore your options now and get a health insurance that you can tap into your twilight years. You don’t want to be spending all your pension on medicines and healthcare, or worse depending on your family to keep you healthy.
Millennials should not shirk from responsibilities required to ensure a stress-free retirement. If you are prepared for it, it is something you can actually look forward to. Play your cards right today to have comfortable future years from now. Know about your investment prospects and never worry about getting old.
About the author:
Boom Rizal is an investor, a property consultant, a researcher and a writer. She finds helping other OFWs in making good decisions when investing in various businesses and/or real estate properties as part of her daily life. She also loves to take research in property innovation and writes articles advising readers on how to invest in a property.