We Ignore Planning for Retirement at Our Peril

Planning about retirement is not a popular thing to do especially when you are still young and at the prime of your career. Young professionals are often engrossed with their goals to achieve in order to realize their full potential. 

We (I count myself among the yuppies) think retirement is a distant thing not to be concerned with too early in our careers. We think of establishing ourselves first. Retirement would hardly occupy our minds. Retirement planning is just one of those things that we put off until we realize later in life that it should have been done much sooner. 

Do I Really Need to Retire?
Not having to work anymore or choosing to stop working is a far-fetched idea for some that it could sometimes be a subject of debates. Those who are new to the idea would resist it and say that they would not need to stop working. But the truth of the matter is, all of us will age and our capacity to produce will diminish. Most of us will never live healthy lives until we die. 

On top of that, there is a law for mandatory retirement age of 65. So unless you are extremely well-off, you would need to plan your retirement early so that when the time comes that you have to stop working there is money to support your needs. 

Wrong Thinking
The lack of planning by more than half of Filipinos who retire is partly caused by the misconception that the pension to be expected from the government through SSS and their employer pension benefits will be enough. But with a simple mathematical analysis, we can easily show that this assumption is false. 

The benefits from the government and from a previous employer will hardly be enough. Unless of course we can accept to live in near poverty during retirement, it will surely come short of our needs. That is why those who have not planned well and faced retirement had to depend on their children to provide for them. It’s unfortunate for the children to have to be burdened because of parents who didn’t plan for their retirement when the children themselves will have their own families to support.

Self-Discipline is Key
Being in good shape financially for retirement will be made possible by delaying gratification. Or to put it simply, this is done by saving a portion of your income now so that you will have something to use in the future. The earlier saving is started the lesser the portion of the income would be needed to set aside. This is the foremost reason why planning retirement early makes a lot of sense. 

A Sense of Urgency
If you understand the time value of money and the power of compounding interest, you know how this works. The money you saved today will earn interest which will in turn be added to your savings making your principal much higher than before thereby compounding your interest earned every time. The number of times compounding will happen is dependent on the time period. So the longer you wait, the shorter the time period and the fewer the compounding will occur. 

So why wait? Plan now, start early and live your retirement the way you want it!