Why do we need to Plan for Retirement? Inflation – The Silent Money Killer

At my age of 29, a lot of people find it odd when I talk about Retirement and how I prepare for my own retirement. They would always say ‘Bata bata mo pa, retirement na agad ang iniisip mo”.  I can’t blame them.  Maybe they just have to see the other side of the coin where I am looking at. Let me show you some items on that side of the coin that I am seeing. Maybe you’ll also start to think about your retirement at this early stage.

According to the National Statistics Office (NSO), 1997-2007 Census, Philippines’ average annual inflation rate for the past 10 years is estimated at about 6%. (For the illustration purposes, I’ve also included the 2008 inflation rate of 9.3%.) To illustrate further, see how the purchasing power has gone done (see illustration below).

average of 6% annually
YEAR % Value of 1,000
1997 5.1% P949
1998 9.7% P856.95
1999 6.6% P800.39
2000 4.4% P765.17
2001 6.0% P719.26
2002 3.1% P696.96
2003 3.1% P675.36
2004 5.5% P638.21
2005 7.6% P589.71
2006 6.2% P553.15
2007 2.8% P537.66
2008 9.3% P487.66

If you got P1,000 in 1996, the only value of that money today 2009  is only P487.66. Imagine that, reducing our purchasing power by more than half of its original value. Because of this, we must make sure that our income, savings and investments grow by at least 6% every year. Otherwise, time will come that it will loose its original value.

When I first saw this, I never thought that inflation will have that great impact on my simple life. That’s why I call it The Silent Money Killer. Agree? Let me know your thoughts by posting on the comment below.

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Garry Zaldy de Castro is an advocate, Financial Advisor, Certified Investment Solicitor (Mutual Fund Representative), blogger, IT practitioner, husband to Aileen and a dad to Jacob and JohnD. He started Financial Planning Philippines in 2008 just to share his financial learning to friends, relatives and anyone who wishes to be financially independent.


  1. invest every month even at P5k to do a peso cost averaging method. you buy shares at different prices, so you dont get affected much by the ups and downs of the market

  2. So true! Not only do we have to make a living. We also have to beat inflation.. tsk tsk.

    On the other hand. Dont things get cheaper each year. Say an LCD TV which costs around 100k ++ before.. but now you can buy at around 40k++.

    I am getting an investment in mutual funds from sunlife and philamlife soon. what do you think?


    1. Most of electronic products are really cheaper now compared to before. Likewise, same goes with their value.

      Mutual funds from sunlife is good, I can vouch for that as I have investments with them.

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