Who me, retire?

By Heinz Bulos

It’s not surprising at all: Filipinos are not planning for their retirement. A global survey by HSBC called “The Future of Retirement” showed that over 80 percent of Filipinos surveyed have no sense of urgency when it comes to retirement planning and have not sought professional advice. Many are just not ready for it. Are you one of them? Here are three reasons that can hold you back.

1. Poor planning
For the more affluent, it’s not so much a lack of planning that’s a problem but not planning right. Joby Lizares, Senior Assistant Vice President and Wealth Advisor of BDO Private Bank, explains that while their clients do save for retirement, there are cases where they may have overlooked certain aspects: “There are those who believe that what they have accumulated over time will be sufficient to finance their retirement. However, when someone retires, he will have more time to do more things. These unexpected expenses may not have been taken into account in the first place.”

Aside from under-estimating retirement costs, Joby adds that another mistake is under-estimating the inflation rate, which includes a basket of only basic goods. But you don’t plan to retire on a subsistence income, do you? If you have dreams of being a jetsetter, driving that sports car, or buying a vacation home, jack up your inflation rate assumption.

2. Inadequate savings
Even if you have a solid retirement plan but you’re not socking away enough to fund your future, it’s just not going to happen. Unfortunately, saving for retirement is not a priority when you’re in your 20s or 30s, when getting married, raising children, renting a townhouse or condo unit, financing a car, and paying bills are your main concerns. By the time you hit middle age, you’ll be paying for college costs, buying cars for your kids, and spending for family vacations. It becomes harder if you continue to borrow to finance your spending habits. Joby advises that you have to make lifestyle changes to reduce your expenses.

3. Relying on others
The HSBC study revealed that, compared to the global average, there was greater dependency among Filipinos on the government, their employers, and their families for support in their retirement years. Only 36 percent of all Filipino respondents expect to fund their retirement themselves, in contrast to 44 percent globally. The fact is, however, social security and even your retirement pay are not enough. Putting the burden on your children, while culturally expected, is actually unfair, especially at a stage when they are supporting their own kids. It may be fine to expect some financial support from them, but the bulk of your retirement savings should come from you.