Have you been taught on how to live your final years before you die?
Chances are, you were not. In the first place, you do not when will you die, right? But assuming that you feel that you are already living out the last chapter of your life, which is your retirement years. How do you plan to live it?
You may have been taught on how to live the right way in school or in church but how to sustain or survive your retirement years up to death – it is usually something personal – even if you have your family with you because the reality is here in the Philippines, it is not discussed among family members, let alone, prepared for.
Sad but true.
Some of you may be thinking, ah, retirement, I will deal with it when the time comes or I’ll cross the bridge when I get there.
It has been said that when you retire, you don’t stop spending. In fact, you may be spending more if you have some serious health maintenance issues.
To prepare for retirement is one thing but knowing when you will retire is another.
When do you know when you are ready to retire?
So many factors to consider…
Probably, I’ll jot down a few items that may hit the mark or cut to the core:
- When you have a plan.
It takes more than a financial plan when you retire from work.
You need to plan out your retirement years. Consider your present situation: are you single or married? If you’re married, do you have children or none? It will have a domino effect when you retire. Priorities change. Schedules will have to be adjusted.
Years ago, I have a friend who always told me, before I get married, I should look for a partner who will take care of me when I grow old. My thinking back then? What if I die ahead of my partner? And besides, I don’t consider it my main reason for marrying my wife, no offense to my good friend. I married my wife because I love her and I want to spend my life with her. So, if you are planning to retire, consider your spouse if you are married. Both your schedules will be affected in one way or another. Will you now drive for your spouse going to the office or will you bring him or her to the doctor for her daily check up? Reality sets in. On the brighter side, will you be traveling more?
Consider your spouse and your situation.
Let’s look at some of the aspects when you retire:
You no longer have to wake up early and beat the traffic going to work if you’re a 9 to 5 employee. So, instead of waking up early or if you will still wake up early – what will you do for the rest of the week? Remember, you may be doing this habitual thing for the next 10 or more years, barring any health condition that may suddenly appear.
Speaking of health, why not have an annual check up to determine if your body is still healthy or may need to start some maintenance, if you don’t have it yet?
And more importantly, have you planned out your healthcare coverage for your retirement years? Remember, your company stops giving you your HMO plan as soon as you retire. Aside from Philhealth, which is not enough, you need to find ways to fund your health fund.
If you are still healthy, you may consider living your retirement years the best years of your life. No more meetings, no more deadlines or quotas to meet, in short, no more stress. And all you have to do is switch your physical stamina to something that you have been wanting to do like travel, or maybe just enjoy your stress-free life – eat out in your favorite restaurants, watching movies, shopping. or having a weekly family get together.
That’s the point of it all: When you retire from work, you don’t actually retire from life.
I have another friend who retired recently and said that maybe he can now take care of the spiritual aspects of his life. I couldn’t agree more with this.
In our church, Cathedral of Praise, there is a group for the elderly people where they can gather on a regular basis, pray together, study the Bible, and have fellowship. A healthy spiritual life and more importantly, a good relationship with God, through His Son, Jesus Christ, can inspire you and give the best years of your life to God. And this could be the best investment of your life – when you give time for God and do some ministry work for the advancement of His kingdom, here on earth.
Last but not the least, consider writing a will esp. if you have assets that you want to dispose of or distribute equally. If you have a family to take care of – spouse, children, parents or siblings – and you are leaving some properties in your name – it would be best to prepare your will so that the family you will leave behind will not quarrel among themselves just because of those disputed properties.
Plan well, beyond the monetary considerations.
When you’re all set, you can now move on to the next item:
2. When you’re debt-free.
When you retire from work, you need to get off those monthly amortization items from your bucket list. It may be a housing loan, car loan, personal loan or even credit card debts. Make sure those have been fully paid for.
What about if you still have a child who need to finish off their studies? Seriously, on this one, you cannot afford to retire yet, unless you have prepared for your children’s schooling years ahead through some form of investing.
Having no debt when you retire takes off that one burdensome list off your “living in the years before you die” period and just spend your remaining wealth for your enjoyment or just plain retirement years. Otherwise, if this is still existing beyond your retirement years, you may want to consider an online work or a selling career until you would have paid off your remaining debts.
3. You need to have enough savings.
Financial planning – you do it for 2 things – if you get seriously sick early or if you die early OR if you get hit by a critical illness condition after retirement or if you grow too old that you need to have ample cash with you to get by. That’s the purpose of Financial Planning. Because let’s face it – you cannot predict when you will get seriously ill or die.
In this case, even if you retire, you don’t stop spending.
How will you sustain the day-to-day expenses? Will you depend on your monthly pension? Rental income, if any? What if you do not have a house yet and are renting a place? Where will you get the money to pay for the rent on top of your daily expenses?Living off on interest? Stocks? or will you still need to work on a commission basis?
There’s a time for everything.
I was told that the mandatory retirement age in the Philippines is now at 55 years old. Maybe, selling as an option will keep you going but more than working for money which should only be a tool, you do not retire from life. And in every decision, there is a cost involved – like if you watch Netflix every night, you are actually spending around P500 a month (as of this writing), multiply that to 12 mos. so you need to budget P6000 for Netflix alone. And when you have Netflix, you need to have internet connection. So, you see, the costs are adding up. Are you prepared or will you cut off some of the things when you can no longer afford it?
But by enough savings, how much is enough? If you can save for 10 years (that’s my take) minimum, based on your present income, that is good enough to get by. But if you think that at this stage in your life – this is impossible to achieve – give it a try for a minimum of 5 years. I just remembered, Joseph in the Bible (in the book of Genesis), when he was appointed the CEO of Egypt saved enough for 7 years so that when famine struck Egypt, they were able to survive and were even able to help others. And he did it by saving enough for 7 years.
The thing, is you have to start saving up, not just for emergency fund (which should be equivalent to at least six months’ of your present income) but for your retirement years, esp. if you want to enjoy your “retired life”.
I may have not covered all – but this is good for a start when you haven’t started any.
Ronnie Reyes is a Senior Financial Advisor and an MDRT Qualifier (2016) of AXA Philippines. Contact him to discuss your retirement plans.