When you’re young, “pension” seems like a strange word that feels so far away, especially if you have more immediate concerns like taking care of your family or meeting pressing financial obligations.

Barring extreme cases and Acts of God, you could be looking at a long life well into your senior years. We’ll explore the reasons for building up your retirement plan and when the best time to build your pension is.

Why SSS and GSIS May Not Be Enough

Every employed Filipino is mandated by law to receive a pension in their senior years from either the Social Security System (SSS) or, if they work for the government, the Government Service Insurance System (GSIS). The pension from these institutions is covered by monthly contributions from you and your employer.

But the monthly payouts from these pension funds rarely go over PhP 20,000, with the average being somewhere around PhP 5,000 to 18,000. Due to various factors that we’ll elaborate on below, these amounts often fall short of covering basic monthly expenses.

Inflation and the Rising Cost of Retirement

Are you finding it hard to balance your budget every month, or even every payday? If you think it’s a headache now, imagine how it could be once you’re in your senior years and don’t have a steady source of income, with you depending only on what SSS, GSIS, and/or your employer provides.

Even living frugally might not be enough, as events beyond your control could suddenly impact your spending, like inflation and a crisis like the pandemic. Adding to what you already get from employer- and state-provided pensions, getting your own pension can help alleviate cost-of-living issues.

Preparing for Health Expenses in Old Age

One of the biggest impacts on seniors is the many health issues that come with age. Even if your family has no prior history of major diseases and ailments, you could still be involved in accidents or get infected with the latest rampant disease.

Aside from having your own health plans, you can defray the costs of emergency health issues or regular checkups if you have a healthy pension fund. Depending on your preparations, you can have the money to cover your medical expenses, and you don’t have to bother your family for them.

Securing Your Financial Independence

Family is central to Filipino life. At times of crisis, more often than not, the people we can expect to be there for us are our family. But unless you come from a wealthy family, even your family can find it hard to continually support your financial needs. No one wants to be a burden, especially to their loved ones.

Building your own pension allows you to have financial independence. You don’t have to trouble anyone for even your most basic needs or, like we discussed above, for emergencies. Depending on how you built your pension plan, you could even become that wealthy tito or tita who the pamangkins love to see because you come bearing gifts every time you arrive for family reunions.

Planning the Retirement Lifestyle You Want

How do you see yourself in retirement? While this sounds like an employment interview question, it is an important consideration to make: how will you be when you grow old? What kind of lifestyle do you want in your senior years?

If you want a comfortable one at the very least, then you most certainly have to build your own pension. Relying solely on state- and employer-sponsored funds may not be enough for a decent retirement, much less for one that involves travel and leisure. An Instagram-worthy senior life is doable, but you need to work on it. And you might need to work on it now, while you’re young.

Why Starting Early Gives You the Advantage

Fund managers and investment specialists will tell you that the best time to invest in your retirement is as early as possible. If you’re in your 20s, that’s often the ideal starting point for building your pension. 

The reasons why an early start in building your pension is beneficial are:

• Compounded Interest. The longer your pension fund runs, the bigger its return when you claim it in retirement.
• Lower Costs. The younger you start, the lower the amount you need to pay into your pension fund for the returns you want in retirement.
• Better Ability to Absorb Risk. You can absorb more risks in your investments the younger you start, allowing for higher rewards.

But even in later years, you can still build a pension fund, if only to provide you with an extra cushion for any challenges in your senior years. Starting early will always have its benefits, but if you don’t have your own pension plan now, today is the best time to start building for your retirement.

Reliable Insurance Brokers are ready to help you build a better future, no matter when you start or what kind of retirement you want. Give us a call, and we will guide you through selecting the pension plan that fits your goals and budget.

Contact Information for Inquiries and Support

If you have any questions or need assistance with your insurance, feel free to reach out to us:

• Call: +63 2 8631 9285 to 86
• Mobile: +63 917 138 5120
• Email: info@reliable-insurance.ph
• Messenger: m.me/reliable.insurancebrokersph

Sources:

• Reeves Group (2024, December 9), What Age Should I Start A Pension?.
• BPI (2021, May 5), The Ultimate Guide To Planning For Your Retirement In The Philippines.
• World of Finance (No Date), A Revolution In Retirement Planning For The Philippines.