My grandfather died last holy week at the age of 84. Well, he’s actually the brother of my real grandfather but since my mother grew up with them, he was like a real grandfather to me.
Don’t get me wrong but this has nothing to do with his death nor his estate. It’s just that, after the interment (libing), out-of-no-where, my Tita approached me with a question. Knowing that I’m with Sun Life Financials, she asked me about investment vehicles for retirement.
She was a previous policy holder of Sun Life – sadly she surrendered in 2008 midst the closure of some pre-need companies during that time. She thought that Sun Life will fold too, but fortunately it’s still standing tall, that’s why she’s considering Sun Life again.
The Need for Retirement Fund
She shared that she has 7 employees at the moment and would want to somehow have a retirement fund for her employees should they decide to stay with her until retirement age. And of course, she also want one for herself. And since she had read books of Chinkee Tan and other financial planners, she knows that with proper investment vehicle, retiring with P10 Million is very achievable.
(By the way, P10 million is only her projected retirement fund need. We haven’t done any Financial Needs Analysis where you can actually project how much retirement fund you will need depending on different factors like life expectancy, income at retirement and existing investments)
I asked her, “Tita, ilan taon ka na nga?”
[ad#content300] She answered “Forty one”.
“At what age would you like to retire?”, I asked.
“Gusto ko Fifty Five”, she answered.
“Actually Tita, we (referring to my wife) are actually doing that right now. Altho it will be different on your case since you’re already forty one. But just to give you an idea, we started at age 30. We invest P5,000/month and plan to do it for 30 years. And if it gives a return of 10% per annum (happily in the past 3 years it’s more than 10%), by the time we reach age 60, we’ll have P10 Million”. I told her.
“Cge nga, icheck mo nga if in 14 years, how much ang kailangan ko per month”, she replied.
“Cge Tita, I’ll try to prepare a projection to determine how much you’ll need to invest on a monthly basis so that you can have P10Million by the time you retire.
Our conversation ended there since they had to go.
I thought to myself, this could be a good guide for people who wants to retire with P10 Million but doesn’t have much time on their side. Why not share it here in Financial Planning Phils.
How to Have 10 Million Retirement Fund?
If you can remember, I previously posted “How to have 1 Million Pesos Even If You’re Just An Employee”. I guess a lot of people liked it and shared in Facebook for 103 times.
Again, we’re going to use the simplest way to achieve this. No, it’s not by any
pyramid scam or networking or any multi level marketing but by having the discipline to regularly invest in Mutual Funds.
If you don’t have any idea what Mutual funds is, I suggest you read the articles in this link – http://www.financialplanningph.com/mutual-funds/
Again, we’re using the 2 allies of money here which is Time and Compounding interest. The longer the time on your side matched with higher interest rate, the more easier to achieve your target retirement fund.
Here’s what I came up with using our Financial Calculator.
|Your Starting Age||Objective – Retire with 10 Million Pesos At Certain Age (10% Annual Return)
How much do you need to save and invest monthly?
|At Age 55||Your Total Savings||At Age 60||Your Total Savings||At Age 65||Your Total Savings|
Say your age right now is 25, you’d like to have P10 Million retirement fund by the time you reach age 55 (that’s 30 years in the making), then you only need to save and invest P4,848.00 in an investment vehicle that earns at least 10% per annum (mutual funds or stocks that is).
And guess how much is your total savings for that – just P1.65Million. Imagine, you get P10Million with only P1.65M. It only means that P8.35Million is the interest you get from that savings.
In our case, we (me and Aileen) altho we started investing in mutual funds at age 28, we only had the discipline to put in P5,000 a month a age 30. We round it off to P5,000 a month instead of P4,848 for easy tracking. Have we been successful in doing it regularly?
So far I could say that we’re ahead of schedule. We even joke sometimes on who’s leading as if it’s a competition.
In the case of my Tita, she’s now 41. If she wants to have P10 Million retirement fund at age 55, she’ll need to invest P28,505.00 per month.
What’s your age right now? Do you also want to have 10Million retirement fund? Better plan and start now.
In a country like ours, having a retirement fund is not mandatory unlike other countries. That’s why it’s a common scenario when Filipinos retire, they got no choice but to depend on their children. (see Story of 2 Lolas)
Even more sadly, it seems that a lot of Filipinos view their children as their salvation when they grow old. Though it’s a good sight to see where children support their parents in their old age, it is not the obligation of our children to do so.
To everyone who are within my generation 50 years and below. I have a simple request to all of you. Let’s make a simple favor to all our children. I hope to see that there will be no parents to take care of – because of the simple fact that we can all take care of ourselves when we grow old.
Let me end with an excerpt from Randell’s blog on what the Bible tells us about retirement.
The Bible actually talks about preparing for the future — many refer to it as the ‘Storehouse’ Principle. Come to think of it, retirement planning is just like filling our storehouses. Let us be consistent in filling up our storehouses so that when the time comes, we will have enough supply for our needs. Retirement planning is no different – we must be faithful in allocating for our retirement so the when we do retire, we will have more than enough. Just as God blesses the storehouses in the biblical times, God will bless our financial plans as well. Remember though, if one does not have a storehouse (or a retirement program in this case), what will God bless then?
In case you’re an OFW, you might want a shorter payment period – 5 year to pay plan – Sun Maxilink Bright
Please SHARE if you learned something. Help us in our Financial advocacy, SHARE!
- sunlife mutual fund calculator (1)
- vul calculator philippines (1)