Are you ready for retirement?
No matter if you are a young professional or someone who is nearing retirement age, this stage in life is something you should prepare for.
It would be nice to imagine a time in our lives when we don’t have to work and instead have a lazy stroll somewhere by the beach with a steady flow of pension benefit from the government and enough savings to dig into.
However, the reality is, the Philippines is one of the most insecure countries when it comes to retirement issues. A study by the Global Aging Institute and Pru Life UK found that 9 out of 10 Filipino workers are anxious about how to stretch their money to cover daily expenses upon retirement when they have little savings and almost no government support.
According to the survey, only 68 percent of Filipinos expect to receive Social Security System (SSS) or Pag-IBIG fund benefits and while only a small number of Filipinos expect to receive money from financial assets.
There are many reasons why saving for retirement may not be in your priority list including having the need to support your family financially.
Being in what experts call the “sandwich generation” may take a toll to your finances. Sandwich generations are those who have a young family and ageing parents to support.
Studies show that people in this generation find it hard to save for their own retirement as their budgets are stretched thinly too often.
The desire (or need) to help your family is good but do not put your own financial health at risk.
Even if you are abroad and you earn enough money, you should still think about how to properly help your family in the Philippines. You have to make sure they do not grow dependent of you and that they save for their retirement as well.
Unless, you do not mind spending for them for the rest of your life – although that is not productive for you or for them.
The Director of the Registered Financial Planner Institute Philippines, Randell Tiongson, suggests five steps you can do to save for yourself and to support your family too.
Take care of your finances first
Before helping other people, make sure you are in the position to help:
✓ Do you have an emergency fund?
✓ Do you have a portion of your income stashed away for retirement regularly?
✓ Do you have freedom from high-interest debts?
If you answer yes to all of these then you can help support your family.
Personally, I know that there are families out there that really need support from each other and their needs cannot wait for enough emergency savings nor do they have enough to pay all their debts. If this is the case then, of course, it is hard not to help out. STILL, strive to take care of your own finances as well.
Ensure yourself and your family. Consider taking out health and life insurance. The cost may be intimidating for some especially if you only have enough to begin with. However, think about it this way, if you and your contributions are vital then it is wise to protect yourself and your family from uncertainties like illness, accidents and even death.
Learn your family’s financial situation
Whether you are single or married and you want to or need to help your family (parents and siblings), you need to know the exact financial situation.
Have a serious conversation with your family. Get to know the financial situation – how much money do they need in a day to day basis, what kind of financial support do they need, how much do they owe who?
After learning about your family’s financial needs, check on your own and see how much you can help. Be clear on how much you can help.
Do not try to carry all of the family’s financial needs unless maybe you are earning millions every month.
As mentioned earlier, be clear on how much you can help.
✓ How often do they need it? Do they need it monthly?
✓ How long should you give support?
✓ How much is your maximum amount per contribution?
✓ What is your family’s financial goal?
Remember that helping is only good when you do not encourage habits of dependency or feelings entitlement.
Teach them good financial habits
Lastly, help your family learn how to set their budget and spend within their budget. Assist them in looking for other ways to earn so that they can provide for themselves better. This way, you can direct the money you peg for them for something else – like extra savings – which they can also use in case a financial setback arises in the future.
Money is often a touchy subject to talk about but it is important for you and your family to discuss before you try to help them. By studying the family’s financial situation, all of the members of the family are on the same page and you get to create a financial goal for the family together.
In addition, you are sure that the money you give to your family goes toward the financial goal and not for a whim or a random big purchase.
The family is important and we will do anything for them, that should include making your family’s finances stable not by providing for them all the time but by teaching them how to be sustainable by themselves.