Many Filipinos don’t really put much thought into planning for their retirement. Some are content with the “isang kahig, isang tuka” approach where they earn just enough money to pay their daily and monthly expenses. Others rely on their children to fund their retirement.
These strategies, however, won’t give you the comfortable lifestyle you want when you hit your desired retirement age. There may be a time where the money you earn won’t be sufficient to pay your bills. Plus, if you have kids, they may decide to start their own family in the future — and put you at the bottom of their priority list.
If you want to retire comfortably, it’s best to start saving for your retirement as early as possible. If you’re in your 20s or early 30s, you can do the following to get your retirement investment off on the right foot:
Map out your Monthly Salary
Find out how much your disposable income is and then set aside a portion of your salary to cover your basic needs, such as food and transportation. If you have any debt, make sure to allot a budget for that so you can pay it off as soon as possible.
Build an Emergency Fund
Make an effort to set aside cash that can cover emergency costs, such as having your computer fixed or getting medical treatment for a minor injury. If you think that saving for emergencies is difficult, take baby steps. Start saving for a month’s worth of expenses — and resist the urge to spend it on things you don’t need. Once you’ve stocked that money, move on to your next goal, which is saving three to six months’ worth of expenses.
Investing your extra cash in stocks, mutual funds, and other investment instruments for your retirement might seem risky. But you have to remember two things:
You shouldn’t be afraid of the risk attached to each investment. Instead, study the risk, find out if it fits you, and look for ways to work around that risk.
You have an emergency fund. This way, if something were to happen to you, you can dip into your rainy day fund instead of taking money out of your retirement fund.
If you want to spend your sunset years on doing the things you want, take the time to set aside cash for your retirement. Remember that the early bird gets the better retirement.