Retirement is something I always look forward to. After several years of working, trading, investing, and doing business, of course, I also want to rest. And I know you want the same.
This is why you should invest in your retirement as early as now. You need funds to enjoy your retirement days. You need money if you plan to travel or buy your own vacation house. You need to support yourself financially once you retire and when you do that, you have to ensure that your savings will suffice.
Here in the Philippines, there are a number of ways to start saving for your retirement. Let me share with you some of the retirement accounts I know.
This is common to Filipinos since it’s mandatory once you get employed. To open your SSS account, you need to be employed or declare yourself a voluntary member. You will pay your contribution monthly depending on your income as an employee. Those voluntary contributors have the option to pay the minimum which is just around 300 pesos. What’s great about SSS is that it’s accessible to all Filipinos. It’s also cheap compared to other retirement accounts.
Another retirement account you can open in the country is insurance. A lot of Filipinos have negative sentiments about insurance. Some misconceptions are: insurance is just an expense, it’s not true and you’re just wasting your money, advisors are only active during the application process, and you can’t get your claims.
However, I think most people who have negative thoughts about insurance are those who don’t have it. Insurance can be a form of a retirement account, especially if you choose the one with an investment feature. If you want to invest in your retirement fund with a great return in the future, insurance is a good option.
PERA or the Personal Equity and Retirement Account is another alternative. This one is launched by BSP in 2006 so if you have a bank account with BDO, BPI, Metrobank, or other banks in the Philippines, you can easily create your PERA account. What makes this unique is the fact that you can skip paying taxes when your PERA account earns interest. You won’t pay taxes, which means you can take home the deposits you make and all the interests paid to you. There is also a law governing this retirement account so it’s safe.
Although treated as a savings account, anyone can put his money in MP2 Fund for retirement. MP2 can be withdrawn after 1 year or 5 years, depending on the lock-in period you chose. Of course, if your purpose is to save up for your retirement, then choosing the 5-year period is more suitable. Then, just roll your investment until you are satisfied with the returns. MP2 is non-taxable too. You can also invest as much as you want and the minimum is only 500 pesos. If you are on a budget, 500 pesos a month is already an affordable retirement investment.