Big Hello for 2016: Retirement Planning Part 1

Almost most of us are earning money from our own effort.  It’s either from salaries, business sales, commissions, or whatever form of income.  In most cases, we are in the same shoes.  We are all going to get old soon or sooner and we have to stop working when we are unable to work anymore.

The correct term for these is retirement.  Yes, we are all going to retire no matter what job or business currently we are in.  You have to consider retirement now unless you are blessed with business empire to manage from inheritance or born with the parents such Mark Zuckerberg or Andrew Tan.

Christmas and New Year celebrations were already went through in our head now.  Did you noticed in your Christmas budget (if you have one), you’d allocated at least 60% of your Christmas bonus for gifts?

If most of us can allocate 60% of bonuses for gifts, then why not for our definitive retirement stage?

Today for my first article in 2016, I’ll create three part series of articles discussing three ways to plan your retirement.  I hope my first series of articles will inspire you to get yourself into retirement planning mindset.

Retirement Planning #1: Plan Your Retirement From a Reputable Insurance Company

Not because I’m offering life investments from a reputable company, because I am a firm believer of insurance investments.

From old mindset about insurance, most insurance today are with investment attachments.  Not only your funds or premiums are invested for a long time, but also with add-ons in case of sickness and personal accidents happened to you.

Speaking of sickness and personal accidents, these two are the most savings eater.  When one of these two entered into your life, your hard earned savings will wipe out and probably leave you with debt.

These life insurance policies are critically important.  Insurance will cover you up to 36 kinds of major diseases, gives you a lump sump money, a daily allowance for every disease, and a surgical allowance.  All of these will be depend on the annual premiums.

What if your just planning your retirement on plain bank deposits and a dreaded disease plagues you?  Is your savings will be enough to cover your medication?

People from reputable life insurance companies hire top-notch fund managers to manage our fund.  From my own policy for best example, I have to invest every year of P55,000.00.  These are my benefits:

  • I have a basic coverage of P1,000,000.00
  • In case of my disability, I’ll receive a lump sum of P1,000,000.00
  • In case of major disease (36 major diseases covered), I’ll receive a lump sum of P500,000.00 plus P1,000.00/day per disease
  • Personal accidents lump sum of P500,000.00
  • In my 65th birthday, my total fund will earn approximately P5.6M (for 10% average earnings)
  • I only need to invest 15 years.

Pros: 

  1. You don’t need to mind what equities you have to choose.  Let these fund managers handle your fund.
  2. Your investments are covered from sickness, personal accidents, and sudden demise.
  3. For only P4,500 per month in 15 years, I can say my retirement is already secured when I reached my age of 65.

Cons:

  1. Your retirement is in the fate of other people (fund managers)
  2. Obliged to invest monthly or yearly.  Several charges will apply if unable to pay premiums.

If the retirement amount is too small for you, perhaps you will not stop there and be contented.  The topic on this series will be more flexible and you have more control in your investment.

Stay tuned.

“Happy new year to all!  Think now about your retirement.  We can talk it over a coffee.”

 

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Eleison Cruz

Financial Consultant. Personal Finance and Investment advocate. Author of The Good Asset, a blog that educates people in investments, financial literacy, and life insurance. Visit www.thegoodasset.ph

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