Question: I’m a millennial and I am wondering if I should start preparing for retirement? – Miguel

Answer: Yes, millennials should definitely start preparing for retirement! Retirement planning is crucial to ensure financial security and a comfortable lifestyle during their later years. Here are some specific reasons why millennials in the Philippines should begin preparing for retirement:

Longer Life Expectancy

Filipinos, like people in many other countries, are living longer due to advancements in healthcare and lifestyle improvements. Longer life expectancy means that millennials may need to support themselves for a more extended period during retirement.

Insufficient Social Security System

While the Philippines has a social security system, relying solely on it for retirement income may not be sufficient. Considering that the system might undergo changes over time, it’s wise to supplement it with personal savings and investments.

Inflation

Inflation can erode the purchasing power of money over time. Planning and saving for retirement help protect against the impact of inflation on future expenses.

Changing Job Market

Millennials in the Philippines may experience a dynamic job market, with opportunities in various industries and types of employment. This flexibility can be an advantage when it comes to contributing to retirement savings and exploring investment options.

Volatility in Pension Offerings

Employer-provided pension plans might not be as prevalent as before. Many companies are now offering defined contribution plans, such as the Pag-IBIG Fund, which requires employees to take a more active role in saving for retirement.

Financial Independence

Preparing for retirement allows millennials to achieve financial independence and reduces the risk of becoming a financial burden on their families during their old age.

Early Start for Compounding

Starting to save and invest early enables millennials to take advantage of the power of compounding. The earlier they begin, the more time their investments have to grow and accumulate wealth over the long term.

Changing Lifestyle Needs

As millennials age, their lifestyle and financial priorities may evolve. Retirement planning ensures that they can maintain their desired standard of living and enjoy life without financial worries.

Access to Investment Opportunities

The Philippines offers various investment options, such as stocks, bonds, mutual funds, UITF and real estate. Starting early allows millennials to explore and take advantage of these opportunities to grow their wealth.

Financial Literacy

Preparing for retirement fosters financial literacy and discipline, which are essential skills for managing money and achieving financial goals.

It’s crucial for millennials to create a personalized retirement plan that considers their income, expenses, risk tolerance, and long-term goals. Seeking advice from financial advisors or retirement planning experts can be valuable in crafting a plan tailored to individual circumstances. Remember that even small and consistent contributions towards retirement savings can have a significant impact in the long run.

Watch out for Build Your Future 2023… details out soon!