According to the Labor Code, the current retirement age in the Philippines is 60. A new law passed last year, however, states that retirement should not be mandatory. You have the option of continuing to work after the age of 60 but who wants to work after the age of 60?
Do you want to work for the rest of your life? Wouldn’t you want to enjoy the fruits of your labor at a certain age by traveling the world or retiring in a bright and airy bungalow by the beach? But how can you afford to have fun when you’re no longer expecting a paycheck every month? That depends on your retirement plans.
Time goes by fast. So waste no time and plan your retirement while you are still young. Remember, it takes a long time to build a retirement plan that assures you to live comfortably with financial security.
Here are some of the best retirement fund methods you can use to prepare for a comfortable retirement.
- Pension Plans
Pension plans are any plans or funds that provide retirement income. It provides monthly income after you retire from your position. The Government Service Insurance System (GSIS) and the Social Security System (SSS) comprise the Philippine Pension System. The Social Security System (SSS) facilitates one of the most accessible pension plans in the Philippines, which provides benefits to all private employees and self-employed individuals. SSS contributions are required by law so they are automatically deducted from the salary of each employee making SSS retirement benefits one of the simplest ways to invest. Read more here – digido.ph/articles/sss-pension-computation-in-the-philippines. Other organizations like banks and insurance companies provide a variety of pension or retirement plans.
The main advantage of having a pension plan is that it allows you to maintain your standard of living in retirement, and savings provide valuable supplemental income in the event of an unforeseen event.
Sean Martin D. Plantado, head of customer service at Digido.ph, notes that the Philippines has many senior citizen programs, discounts and bonuses. These help seniors to keep their savings and are a significant help beyond retirement.
- PERA
The Personal Equity Retirement Account (PERA), which is equivalent to the 401k Contribution Plan or the Individual Retirement Account (IRA) in the United States, was fully implemented by law in 2016. PERA is a voluntary retirement contribution plan that allows Filipinos including Overseas Filipino Workers to save and invest up to $100,000 per year. Furthermore, the returns are completely tax-free. It supplements the existing SSS retirement benefits. It is open to Filipinos who are 18 years old and above and have a Tax Identification Number (TIN). PERA can only be obtained through banks, insurance companies, or any other administrator accredited by the Bangko Sentral ng Pilipinas (BSP), the Insurance Commission, and the Securities and Exchange Commission.
- Insurance Plans
Another way to save for retirement is to invest in insurance plans wherein your contributions will be accumulated in lump sum payments that you can use later on. It can provide for you and your family in the event of the need for hospitalization due to illness or accident and even death. FWD Insurance, for example, offers bundled plans that address all of these needs: life insurance, investment, critical illness, and accident.
Retirement should be viewed as an opportunity to do more rather than less. Getting an insurance policy should help you save for the long term by providing you with regular guaranteed payouts as well as one lump sum. Consider the following benefits:
● Guaranteed Lump sum Benefit- have the option to receive your cash benefits in full or as regular payments.
● Guaranteed cash values allow you to borrow against your policy in the event of an emergency.
● Guaranteed Life Protection- enjoy life insurance up to the age of 65 for the protection of you and your family.
● Get more out of your savings by adding extra features to your plans, such as guaranteed cash payouts or additional converge.
● Dividend earnings- this is additional income that you can reinvest or use for personal purposes.
You can have a free consultation with your advisers to know more about this.
- Financial Funds
Banks, insurance companies, and other financial institutions provide a variety of funds that are already invested in a wide range of industries. Bonds, stocks, and other investments can be complex, but these institutions have fund managers who will handle them for you. Some insurance companies also offer funds with higher returns because they are in US dollars.
- Real Estate
Owning a home or other properties by the age of 50 or 60 is a common goal among Filipinos. It’s a wise investment, especially if you can’t afford to pay rent on a monthly basis. The value of your home or condominium unit increases over time, especially if you choose a good location. Also, take into consideration that owning a property that can eventually be rented out can provide you with a source of income once you retire.
Real estate investing in the Philippines is an excellent option. This industry is thriving and yields excellent returns. Because of the country’s stable economy and continuous expansion, real estate investments are an excellent way to save for retirement. While many industries suffer or are derailed in times of unforeseen events like the pandemic, the same cannot be said of real estate. The value of land continues to rise, as do home prices. If you are in the market to purchase a home, some of the best real estate locations to invest in in the Philippines include Makati City, Quezon City, Iloilo City, Davao City, and Cavite City. Some factors that should guide you on what home to purchase include affordability, accessibility, safety, and current finances.
Investing is always risky. Analysts believe that investing in multiple plans or a combination of any of the best retirement savings plans on the list is the key to long-term financial security. If you’re new to investing, start with a high-yield savings account, time deposit, retail treasury bonds or government bonds, or dividend-paying stocks. Invest while you learn to build a good retirement fund that will allow you to retire when you want.
Suman(Kul Prasad) Pandit is an accomplished business professional and entrepreneur with a proven track record in corporate and start-up sectors in the UK and USA. With a focus on sustainable business practices and business education, Suman is highly regarded for his innovative problem-solving and commitment to excellence. His expertise and dedication make him a valuable asset for businesses seeking growth and success.