Most of us don’t even think about retirement when we were young. Our parents and family don’t include us in planning because we are still young. And then we grow up, we start working and we will be so busy chasing our dreams and the next thing we know, we are getting close to retirement and we have not prepared for it. I hope we don’t consider our children our “investment” and expect them to pay us back and financially sustain us for the next 20-40 years of our life after retirement. Because if we are a burden to them, they too won’t be able to prepare for their own retirement and they will be repeating that sad, sad cycle with our grandchildren and the next generation.
It takes time to build a retirement fund, so it is best to start early. If you missed that, the next best time is now.
What’s your dream retirement?
Mine is a comfortable one, at age 60, still healthy and able to travel, go on a cruise abroad, not worrying about money. I want a small house on a farm with fruit – bearing trees, vegetables and animals. I want maybe 2 condo units being rented out to give me additional cash flow. I want to have a 5-door apartment that will be rented out to sustain me and my family for our daily needs, I want to have enough insurance and health coverage that I don’t have to worry about the what ifs of life and of course, an emergency fund ( just in case).
So how much money do we need to retire?
To give you an idea, we will use this example. A 40-year old mom, with monthly expenses of P50,000 a month. We need to figure out the future value of P50,000 by the time she is 60, which is 20 years from now. Let’s use the 4% inflation rate.
P50,000 x 12 months is P600,000 living cost per year x 4% inflation x 20 years until retirement, her annual living expense by then will be P1,080,000 (year 2041).
Assuming that this mom will live for the next 20 years after retirement (60+ 20) and will die at age 80, she will need P21 Million retirement fund, P1,080,000 x 20 years.
P21 Million, let that sink in.
How will she achieve all those if she will not prepare for it now? What will happen if she fails to plan? Who will suffer? What kind of golden years will she have? What will be the impact of this to her children and grandchildren?
It takes time to build wealth and you better start now. Retirement is like planting a fruit bearing tree. You don’t plant it today and expect it to bear fruit right away, do you?
Start with what you can, while you can. And while you are doing that, make sure you have enough health and life coverage too, just in case. Talk to a financial advisor today, there are so many financial instruments out there that can help you achieve your goals. There’s no magic, it takes time.
Disclaimer: The views and opinions expressed here are those of the author and do not necessarily reflect that of the Insurance Company that the author is representing. The content shared here should also not be construed as advice. Please talk to a Financial Advisor/Planner.