The current retirement age in the Philippines, according to the Labor Code, is 60. However, a new law passed last year which states that retirement should not be mandatory. You can choose to continue working even after you turn 60.
But would you really want to work for the rest of your life? At a certain age, wouldn’t you want to enjoy the fruits of your labor—traveling the world or retiring in a bright and airy bungalow by the beach? Of course, you do! But then, how can you afford to enjoy yourself when you are no longer expecting a paycheck every month? Well, that depends on your retirement planning.
Here are five of the best retirement fund methods you can use to prepare for that comfortable life after 60, or earlier!
1. Pension Plans
Pension plans provide you with monthly allowances or a whole lump sum amounting to your total contributions. One of the most accessible pension plans in the Philippines is facilitated by the Social Security System (SSS). This is considered as one of the easiest ways to invest since SSS contributions are mandated by law, and are automatically deducted from your salary.
Other institutions like banks and insurance companies also offer a variety of pension or retirement plans.
The Personal Equity Retirement Account (PERA) has been fully implemented by law in 2016. According to financial analysts, this is the Filipino counterpart of the 401k Contribution Plan or the Individual Retirement Account (IRA) in the United States.
PERA is a type of retirement investment plan that can only be availed through banks, insurance companies, or any other administrator accredited by the Bangko Sentral ng Pilipinas (BSP), the Insurance Commission, and the Securities and Exchange Commission. PERA is a voluntary retirement contribution plan that gives you the freedom to save and invest up to ₱100,000 annually. Also, the returns are completely tax-free.
3. Insurance Plans
Another way to invest for your retirement is through insurance plans, wherein contributions can result to lump sums later in life.
Aside from the financial protection it can provide you and your family upon your death and in the event of critical illness or accident, it is also an investment which you can potentially grow. FWD Insurance, for instance, has bundled plans that will address all these needs: life protection, investment, critical illness, and accident. Schedule a free session with your advisors.
4. Financial Funds
Banks, insurance companies, and other institutions offer a variety of funds already invested in a diverse set of industries. Bonds, stocks, and other investments can be quite complicated but these institutions have fund managers who will take care of it for you. Some insurance companies, like FWD, even offer funds with returns in US dollars for more profit.
5. Real Estate
Owning a home or any property by the time you turn 50 or 60 is one of the main goals of Filipinos, and for good reason. It’s an investment that makes sense, especially if you can no longer rely on a monthly income for rent. The value of your house or condominium unit appreciates as the years go by, especially if you have chosen a good location. In addition, owning property that can eventually be rented out can give you a source of income once you have retired.
Investments are always risky. This is the reason why there is no silver bullet or magic wand in terms of finances. Analysts say that the key to long-term financial security is to invest in more than one plan or a combination of any of the best retirement savings plans in the list.