If you were thinking of relying on your SSS or GSIS benefits to fund your expenses when you retire, then think again. The painful fact is that those government benefits are hardly enough to support anyone, much more if you want to retire in comfort. Currently, the maximum SSS pension is at Php13,000++. That’s right, Php13,000. And that’s if you paid the top tier of contributions throughout your entire employment history. What exactly can Php13,000 get you these days? Groceries and/or utilities?
The rule of thumb when it comes to retirement savings is to replace 80% of your pre-retirement income for your golden years. Popular personal finance author Rose Fres Fausto also simplifies calculating retirement expenses into “annual expenses x number of years before you go to heaven.”
While it is true that your expenses will decrease to some extent in retirement, you will also find that you’ll be spending extra on other items as well, so the 80% rule might not be accurate in all cases. On the other hand, although Rose Fausto’s computation seems a bit cheeky, it pretty much encapsulates how retirement planning should be approached. If you spend x amount every year and intend to live 30 years after retiring from employment, then you should multiply your annual expenses by 30. Easy-peasy. Of course, this is very much simplified as it does not take inflation into account and seems to imply that that is all you will need. So again, approach with caution.
When I think about retirement, I can’t help but look towards my parents who have accomplished the “retire by the beach” scenario every person seems to aspire for. However, my parents are far from living the stereotypical sedentary, retired lifestyle because they’re overseeing a beach resort in Biliran and with it comes the usual headaches of managing a group of people, ensuring that operations run smoothly (or frankly that they just run, period), balancing the books etc. I’m not exaggerating when I say that they’re busier now than they were pre-retirement and that my mom probably misses the security of having a steady source of income. Anyway, the point is that they were able to successfully accomplish what they’ve been working for all of these years and for that, you have to give them credit.
I am honestly not happy with how my FAMI-SALEF funds are performing. After two years of sporadic investing, my money grew by a measly 7% lang. Ok, so granted that this is merely an average of my entire investing history with FAMI-SALEF. Also, when I looked at the chart, my very first investment has grown by 23.18% in two years, so that’s not something to be glum about. But I thought it would be more impressive, that I would open my account and do a happy dance upon seeing my gains. Or maybe I’m just expecting too much? After all, one of the speakers in the RFP* seminar said that when it comes to mutual funds, you’ll start seeing stupendous gains after a decade or so of continuous investing, once you’ve established your critical mass.
Anyway, I’ve been looking around to see if I should make the switch and came out with a chart to guide me.
I have a problem about being in the present. Even now while typing this, I have five other tabs open and my mind is jumping to the letter I have to draft within the day, while thinking about what else I have to accomplish for the day.
When I’m with my son, I browse Instagram and Facebook on my phone while he’s watching TV. I tell myself that it’s ok because when he turns to me, I put my phone down and turn my attention to him. Obviously it’s not, and even he knows it, as he swats away my phone or grabs it and runs off with it, probably seeing it as the enemy to my attention.
It’s the same with our finances. I get so overwhelmed about what I need to accomplish and the fact that I’m doing it all alone, that I try to shove it to one side and do bits and pieces blindly, without a general plan to guide me. Case in point was how long it took me to calculate my net worth and create a zero sum budget.
If I were to rank our financial to-dos, it would be as follows: