What do you visualize your life to be like when you retire, or after you’re done putting your kids through college? Do you see yourself traveling the world, or just having a quiet and enjoyable time at home? How about participating actively in organizations or causes you didn’t have time for when you were working full-time?
Before you visualize your retirement, you need a plan for how to get there. Use the information below to map out your post-career path.
Inflation Slowly Erodes Savings
Your post-work savings should depend on the lifestyle you are envisioning for yourself after retirement.
You have to take inflation into account as well. The value of your money now will certainly depreciate over the years; just the past 30 years found inflation bouncing between 1% recently and as much as 20% during the Ramos administration.
That means items you could buy for P1 back in 1998, you need P2.40 to buy in 2018, 20 years later. That’s a 140-percent increase!
Setting Aside a Nest Egg
So, how do you start saving for retirement? A useful rule of thumb is setting aside at least 20 percent of your monthly income for your savings.
As your income grows, you can save a bigger monthly portion away, especially if you are looking forward to a lifestyle of extensive travel after retirement.
While you may let some of your savings sit at the bank as part of your emergency fund, don’t put it all there, especially as savings accounts earn little interest. If you want to make your money work harder for you, find investments that yield higher interest. Ask a financial advisor to recommend investments that are right for you.
Insurance and Investment
Beyond putting aside money for savings, let your money work for you in smarter ways by investing in financial solutions that give both life insurance and investment.
Insurance will help take care of you and your loved ones in case of unforeseen circumstances; the investment and its relatively higher-interest yield can help you prepare for retirement. Getting both in the same product not only provides both sets of benefits, it’s also more convenient than getting them separately.
AIA Philippines’ AIA Future Builder, for example, offers both life insurance and investment in a single package. The premium you pay goes toward insurance in case of unforeseen circumstances, and also toward expertly managed funds that yield interest in the long term.
AIA Future Builder also offers the flexibility of increasing the amount of your investment over time, especially as your income grows.
You can also protect yourself against unexpected health expenses by attaching a critical illness rider. Critical illnesses can be rather expensive, going way beyond what a health card can cover, so insurance coverage for such a setback can help keep your savings intact.
Think you’re ready for retirement? Or at least ready to plan for it? Learn more about AIA Philippines products here to get your started.