Young professionals are complacent with their financial situation and doesn't bother them to worry about retirement at the early stage of their career. They kept on providing excuses like "I'm still young" or "I still enjoy working" as a reason for not planning for their future. Before we go further about retirement, let us try to define the true meaning of retirement by removing some common misconceptions about retirement planning.- "I plan to retire at the age of 40 so that I could setup my own business
- Retirement is not having a business of your own. If you set-up your own business, you would still be actively working of your income
- "I would like to stop working at 55 so that my children will take care of me"
- Retirement is not depending on someone else. Would you like to burden your children of additional financial expenses which they should have been using it for their own family? Think again!
- "I think I will die early, that's why I don't think about retirement"
- What if you will live long? Would you like to see yourself begging for food from your children? Would you like to see yourself still working at the age of 70?
- "I will plan on my retirement 5 years before I retire"
- Seriously? Have you heard of inflation rate. Or are you hoping that you will win the lottery.
- "I have retirement benefit on my company, I don't need to worry about it"
- Good for you if you imagine yourself working at your current company at the age of 55 or 65. But you have to consider other situations that might relate on your company. What if you no longer like to stay on your company? What if the the company was dissolved? What if they laid you off?
Statistics based from Study of Lifestyles, Attitudes and Relationsips (SOLAR), out of 100 Filipino Retirees:
- 22 continue to work
- 30 rely on charity
- 45 depend on their family or relatives
- ONLY 2 ARE FINANCIALLY INDEPENDENT
I found the suitable definition of retirement from the books of Colayco and sales presentation of an insurance company. Retirement is being able to have sufficient fund or income generating assets that is able to sustain your current lifestyle. It is the capability to achieve financial freedom without having to worry about money to support your needs and wants.
Retirement expenses
Based on the definition of retirement, we will emphasize on the aspect of "no longer actively working to sustain your current lifestyle".
Because of inflation rate, you may want to consider planning for your retirement because of increasing expenses. If your current age is 30, and your monthly expenses is 20,000/month with an annual inflation rate of 5.8% (15 year average inflation rate from 1995 to 2009), your monthly expense at the age of 55 is around 81,000/month.
| Age | Monthly Expenses | |
| 30 | 20,000.00 | Still Working |
| 35 | 26,512.97 | |
| 40 | 35,146.87 | |
| 45 | 46,592.39 | |
| 50 | 61,765.13 | |
| 55 | 81,878.84 | No Longer Working |
| 60 | 108,542.55 | |
| 65 | 143,889.26 | |
| 70 | 190,746.56 |
