Do you know how much you need to have saved up for retirement?



We work hard for more than half of our lives so it’s no surprise that many just want to retire in comfort. A lot of people put off their dreams, hobbies, and interest in favor of a full-time career, so retirement gives them the chance to go back to the life they’ve put on hold.

But retiring also means letting go of a stable paycheck and relying mostly on a retirement fund. Now the question is: how much should you have saved for retirement? It's a good question and something that we may not think about until we get close to retirement age. But if you don't know the answer, it can be a real problem.

How much should you have saved for retirement in the Philippines?

As a general rule, you need to start saving up for your retirement fund as soon as you can. Expenses and the cost of living increase over time due to inflation, so you need to anticipate this when you budget for your retirement.

As to how much you should save up exactly, there are many other factors which can help you come up with a figure.

1. Health

One of these factors is your health since your medical expenses during retirement can be extremely high. Even with a Senior Citizen’s Discount and SSS benefits, you’re still likely to spend at least PHP 10,000 on medication alone. If you need to undergo any surgery, such as a hip replacement or heart bypass, this will set you back at least PHP 500,000.

2. Location

Another factor is where you plan to live during retirement. For example, if you have made plans to move permanently in with your children when you retire, then it's likely that your monthly expenses will decrease. This will give your retirement fund a little more leeway and can be used for other investments. 

On the other hand, if you have plans on living in the metro or the province by your own, you’ll need to adjust your retirement fund accordingly. Living in a city with high cost of living may be more expensive than moving to a beach town or the mountain province like Baguio. 

3. Lifestyle

Another factor is your lifestyle and hobbies since these can change dramatically after you retire. If you expect to spend a lot of money on travelling during your retirement, then it will likely make sense for you to save more than if you plan to take things easy when you retire. 

There are some other questions you also need to ask yourself about your retirement plans:

• How many years will your savings need to last? If you retire at 40 vs at 70, then you’ll need to put away a lot more when you’re younger to compensate for the years without a regular paycheck.

• Are you covered by a pension plan?

• Will SSS benefits cover all of your living expenses? 

• How much are you spending now on housing, food, clothing, and other things? What about medical expenses?

Answering these questions honestly and thoroughly will help determine how much money is enough to live on. While retirement funds will vary from person to person, a good place to start would be to save around 70% to 80% of your pre-retirement income for retirement. From there you can adjust accordingly.

But even with this in mind, the good news is that you have plenty of time to save money for your retirement. In fact, as long as you start saving early enough and keep up with it every month, then there's a pretty good chance that you will have saved enough money by the time your working days are over.

How to save up for retirement

Now that you have a general idea about how much you need to put away for retirement, the question now is how to save up that much. 

Experts recommend putting away 10% to 15% of your monthly salary towards your retirement. The key to applying this rule is to start as early as you can so you can and build a sizeable amount come retirement.

The best way to save up for retirement is by making wise investments. Putting money away each month will ensure you get to save, but because of inflation, you don’t get to save up as much as you think you would, even with interest involved.

The trick to making your money grow is by putting it in investment vehicles designed to give you high returns. The problem is, what kinds of investments are the right one?

Investing in a retirement plan

Here is where a life investment retirement plan comes in handy. When you apply for a life insurance investment plan, you’re partnering with Financial Advisors who know how to best handle your finances, so you meet your financial goals. 

With a life investment retirement plan, you not only get to grow your retirement fund, but you can also receive regular payouts which you can use for daily expenses. A life insurance retirement plan also ensures your family is protected should anything happen to you by giving them a lump sum upon your untimely demise.

Start planning for your retirement today. Talk to one of our Financial Advisors to find the best retirement plan for you.