Why You Should Save Up for Your Retirement
Jul 29, 2020 3:19:00 PM
If you asked the average income earner in the Philippines about whether retirement was important to them, they would likely answer yes. But sadly, recent statistics, like that of the 2018 Manulife Investor Sentiment Index, show that retirement isn’t an urgent priority among Filipino earners. Those interviewed who were older than 25 and had monthly incomes above PHP30,000 had less than 4 months’ income set aside for their retirement. Compared to other Asian earners, who have at least 2.9 years’ worth of income allotted for retirement, the Philippines has a lot to improve on.
Perhaps these numbers can serve as a wakeup call for your own financial situation. When you stop working, will you have enough money in your retirement fund for you to fall back on? If you don’t have a clear answer, then it may be time to start saving money more aggressively for your own retirement.
What follows is a feature on why you should start saving for your retirement now, courtesy of our financial experts here at PayMaya. Even if your retirement seems very far from now, it’s never too early to start planning your future. After all, the financial decisions you make today—including those for your retirement—will affect you for a lifetime.
The Top 10 Reasons Why Saving for Your Retirement Should Be a Priority
You Won’t Always Be Earning Income, But You Will Always Need Money
Today, your income is likely what’s paying for your daily needs. You may earn just enough from your 9-5 job to pay for food, rent, transportation, and other expenses like your children’s tuition. But as you grow older, it may not be as easy on your body to keep up the same routine. At some point, it will be healthiest for you to rest from this routine and spend most of your time at home.
But even during retirement, there are still bills to pay. The expenses don’t stop coming in when your regular income opportunities do. That’s why it’s a good idea to buffer your retirement savings as early as now. When you are no longer young, your retirement fund will make it easy for you to take care of your ongoing needs.
Your Retirement Funds Will Cover Even Rainy Days
Everyone wants a retirement that sees them age in the peak of their health. But no one should forget about the many health risks that materialize during the golden years, like increased chances of getting sick or injured. It’s never cheap to go to the hospital, to take maintenance medication, or to undergo physical therapy. That’s why you should have sufficient amounts of money in your retirement fund to cover these.
Saving aggressively for your retirement today will lighten your load during a future emergency. You’ll worry less about making ends meet if ever you need to get treated for an illness or an injury. This alone should be motivation enough to regularly set aside part of your income for retirement.
It’s Now Very Easy to Save for Retirement
In the past, saving for retirement may have been difficult because it was hard to manage money as is. Tracking expenses and depositing money to different accounts likely took a lot of time and effort. But we are now in the digital era, and there are many new technologies that can improve your money management tasks. Such technologies will benefit you both now and in the future. On PayMaya’s platform alone, there’s already a lot that you can do.
For starters, you can create a free PayMaya account for your daily finances, including those related to your retirement. PayMaya’s system is known to be quick, intuitive, and user-friendly, so you will have no problem completing digital payments and tracking them afterwards. You can top up your PayMaya account with funds from the Philippines’ most trusted banks and remittance centers. And when you have enough in your account, simply use PayMaya to send money to the bank account you’ve dedicated to your retirement savings.
Thanks to these technologies, putting part of your monthly income into your retirement fund will be a breeze. Take advantage of how easily you can spend, track, and save your money right now, and your future self will thank you for it.
The Sooner You Start Saving, the Bigger Your Savings Grow
Oftentimes, it’s tempting to think of saving for retirement as something you can start on anytime. That may leave you to start setting aside retirement money late, or when retirement is already on the bend. But if you only start saving money closer to your actual retirement, you’ll have a very limited amount for it.
It’s best to prepare for retirement as early as in your 20s or 30s not just because you’ll be saving more money more frequently. It’s also because the money that you save today can compound, or increase in value. In a way, you’ll be making more money on the money you’ve already set aside. With smart saving and investment choices, you could become financially secure well before your retirement begins.
Saving Money Now Ensures a Higher Quality of Life Later
You may initially find it hard to tighten your belt now. But it will be even more painful if you have to do so in your golden years. While you can still afford to be frugal and set aside money for retirement, instead of fleeting pleasures, you should take the opportunity.
You’ll thank your past self for setting aside the funds to live more comfortably in your older age. You’ll be more relaxed about your spending, and you won’t be as anxious about where the money’s going.
Being Disciplined with Your Money Management Will Reward You Both Now and Later
Being conscientious about your retirement savings will be a reward in itself. You may develop better financial habits that will benefit you for the rest of your life, from now until your retirement. Improved spending habits will prepare you for even the most difficult financial situations in your old age. Thus, it’s important to increase your discipline with money, and not only the money in your account.
You can build this discipline in small ways, like being more conscious about your online purchasing habits. Try using existing financial tools to make you more accountable, like a PayMaya virtual payment card that you only bring out for basic needs.
Saving for Retirement Can Free Up Money for Investing
The money you set aside for your retirement doesn’t need to sit still in an ordinary bank account. When you have enough of it, you can also explore different means of investing and earning passive income.
Some methods that you can use to grow your money are:
By the time you retire, you may have much more money than you would have had originally had if you’d simply saved it. So use your pre-retirement years to learn about investing, and find financial experts who can help you handle your money.
Other People Benefit When You Save for Retirement
When you envision your retirement, you likely think about how it benefits one person: you. But you are not the only person who will be involved with your own daily needs as you age. You’ll still need the support of your partner and your family, and they will do their part to take care of you.
It’s a given that having money set aside for your retirement will make it easier for you to take care of yourself. But it also makes it easier for your loved ones to support you without too heavy a financial burden. The opposite applies, too. You may have enough in your retirement fund to contribute to the wellbeing of your family, such as for the schooling of your grandchildren. Having substantial retirement savings, then, will allow you to be generous with others as well as yourself.
You Can Fulfill Your Biggest Dreams During Your Golden Years
Without a 9-5 routine, you can expect to have a lot more control over your time and your energy during your golden years. Your retirement will give you prime opportunities to relax and let loose. But this can also be the time that you dedicate to pursuing goals you left for last. You can go about purchasing your own house and lot, buy a new car, or travel the world.
Now that few things are holding you back from doing so, you can use your retirement years to fulfill your biggest dreams. This will be possible for sure if you have enough in your retirement coffers. So think of what you want to achieve by the time you’re 60, and keep that in perspective every month before your retirement.
Having Your Own Retirement Fund is Extremely Empowering
Lastly, having a substantial retirement fund will be extremely empowering to you—and at an age where you will definitely want that empowerment. Even when you’re of retirement age, you will likely still want to be responsible for yourself and in control of your decisions. It’s both healthy and uplifting for senior citizens to believe this about themselves.
Your retirement fund will be the fruit of all the hard work you’ve accomplished over the decades. If you keep up good financial habits like saving regularly for retirement, you’ll become independent, goal-oriented, and financially free well before you retire. Ultimately, you’ll become a person your younger self would be proud of, and a person who has few regrets before their old age.
Some Last Tips on Preparing for Your Retirement
The list above provided you with ten good reasons to make saving up for retirement a personal priority. But now that you know how important it is to save for retirement, you may be wondering just how to kickstart the habit.
Here are some additional tips that will help you remember to save for retirement, and eventually build a retirement fund that you’re happy with.
Commit to Retirement as Early as Now
Resist the temptation to put off saving for retirement until next month, or the next, or the next. Before you know it, you’ll be close to retirement and you’ll be regretting that you didn’t save up earlier. The best time to start saving is this month, when you receive your next salary. And don’t save only sometimes, whenever you feel like it—save often enough for it to become like second nature to you.
Determine What Your Retirement Goals Are
Everyone has different ideas of what their ideal post-retirement life should look like. The question is, what is your idea of a perfect retirement? Is it one in which you’ve saved a certain amount of money? Is it a future where you can start a new business or travel around the world? Once you know this for yourself, it will be easier to commit to saving—because you know exactly what you are saving for.
Automate Your Contributions to Your Retirement Fund
To make good on your promise to save up every month, follow a system where it’s easy to do so. If having a reminder on your calendar won’t work, you can choose to auto-deduct a fixed amount from your bank account every month. The money can go from your salary account right to an account that’s dedicated to your retirement funds. That way, there’s no risk of you forgetting to allot part of your monthly salary to your retirement.
Growing old and acclimatizing to your retirement will be a challenge. You’ll have to learn new ways to take care of yourself, to maintain your independence, and to support your loved ones. But it will be a great relief to have a retirement fund that you can fall back on. Start saving money for your retirement today, and celebrate the gains when you’ve entered your golden years!