According to Julia Kagan (2020), “retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve those goals.” Retirement planning involves identifying sources of income, estimating expenses, implementing a savings program, and managing assets and risks. Basically, retirement plans involves financial strategies that will sustain one’s self during retirement.
Referring to the financial hierarchy of needs again, this is the point of your life where you will enjoy all the saving and budgeting journey you did when you were younger. Financial success doesn’t just end on saving, managing and investing. Financial success has also to do with planning for life after paid work ends. Sound retirement gives you security and peace of mind in your old age. This is the time where you need not to hustle more. This is the time where you enjoy your pensions, enjoy financial freedom and indulge on the things and estates you have invested on when you were younger.
There are several benefits of retirement planning ranging from financial to personal and psychological level especially in the Philippine setup.
(1) Peace of mind
Planning ahead reduces stress, worry and insecurity during retirement. Some lack of planning creates a lot of uncertainty around the topic that create unprecedented level of stress. Retirement age is the age of relaxation and enjoyment. This is a time where you can enjoy all the assets your family made during your working age.
(2) Cost saving
You don’t want to end up being a senior citizen with regrets not having saved up for retirement sooner. It is advisable that you waste no time and plan for your retirement and your husband’s retirement while you are still young. Building a retirement fund assures that you will live comfortably with financial security.
(3) Get out of debt
You will be able to appreciate the benefits of your retirement plan if you have cleared all your debt before you stopped working. Unpaid debts may only give worry to your family and you may end up paying for the debt you incurred previously rather than splurging your retirement money on the things you like.
(4) Prepare and contextualize pre-retirement decisions
If you take time to plan for your retirement sooner, you will be able to make more efficient career-related and your general financial decisions prior to retirement. With this, it can help you visualize your future plans and plans after you stop working. You start thinking and preparing- what will happen to you now? What now?
(5) Your SSS pension will never be enough
Do not assume that your SSS pension and your husband’s pensions will bear the same amount as your work salary. You will need to level your lifestyle according to your SSS pension.
(6) Your children are not your retirement fund
Build your own retirement fund. It is an accepted fact that parents invest everything they have to raise their children right; however, it is not true that your children will forever be indebted to pay for your retirement benefits when you reach old age- it defies the law of financial independence.
(7) Life longevity
In this era, old people are expected to live longer. Imagine if you and your husband plan to retire at age 60 and you will live up to age 80 or more, how will you be able to sustain your daily consumption if you do not work anymore? What will be your alternative incomes? That is why, before retirement, you need to foresee and plan for these things.
To plan for your retirement properly, you have to consider:
- Your target retirement age
- How much money will you need for your retirement years
- Where will your retirement income will come from
- Which place will you retire
- The lifestyle you want to maintain during your retirement
- How will you build your retirement fund
- How will you continue your long-term healthcare plans
How will you manage and protect your assets before and after you pass away
Joey Bajar was accidentally became an “Entrepreneur” and “Affiliate Marketer” at the same time due to a lot of research and by reading books and also by reading success stories of some well-known millionaires in online business industry. He is a web designer and SEO Specialist for over 10 years. Today, he is running his own online digital business.