By Francisco J Colayco


When should I start saving up for retirement?

From the moment you have any kind of income, you should already be saving for your retirement.  Unfortunately, this is the last thought of any young person in his first job.  He is probably thinking of paying back educational loans or finally enjoying some freedom.  He can still do that, but he must save a portion that he will grow slowly.  Unfortunately, this idea is not taught in any school when it is so important, especially now that there are so many challenges facing the aging population.

There are government agencies in charge of providing retirement pay like the Social Security System (SSS) for private individuals or the Government Service Insurance System (GSIS) for government employees.  However, the amounts you could receive are dependent on how long you actually work and remit regular payments.  You have to keep good records of proof of your monthly remittances, as it is difficult to apply for retirement without these.  Also, as part of your risk management, you should not depend solely on these government agencies for your retirement.

I cannot overemphasize your obligation to grow wealth over your lifetime.   Remember, you cannot share what you don’t have.  You need to build your own wealth first to secure your future as well as to share your bounty with your loved ones.

The formula is simple:  Raise Capital. Go for long-term growth. Secure cash flow.

For most, raising capital comes from savings. I cannot stop repeating the principle income minus savings equals expenses.  When you set aside a part of your income, ideally 20% before spending for your regular needs, you will have available funds for you to invest.  A part of this amount can be targeted for your retirement.  You need to compute how much that amount will be.  (There is a formula that you can get from our website

Identify the monthly amount that you will need to set aside to reach the amount you will need for retirement.  When you are young, you will be surprised at how small that amount could be.  Time is your biggest ally.  The longer the time you keep your money invested, the lower the risk, the higher the returns. The trick is to get the right estimate of what you need when you retire, compute what you have to set aside, save regularly and invest correctly.  In no time, you will be pleasantly surprised with what you already have in your retirement fund.  Make use of the power of compounding.  the longer the investment horizon, the greater the power of compounding works for you.  Once you have built sufficient resources, you can secure regular cash flow through prudent investments.

As long as you have identified the amount for retirement savings, you can already allocate all the other amounts for saving for your car, your home, and education of your children.  Perhaps, you will think that those are more important than your retirement.  In the short term, you are right.  You need to put aside more money for those goals.

But if you start young, believe me, you will only set a very small amount for your retirement so do it even if you don’t find it so important.  As you grow older, you will have to put aside a bigger and bigger amount.

I read an article written by Sydney Lagier, a retired person who writes blogs and articles on retirement in the US News. Her ideas are a very good starting point on why you should have enough money saved when you are no longer working.  The term used for not working is “retirement.” Today, very few people of “retirement age” normally 65 years, really retire.  It even seems that people who retire actually grow old faster.  You can choose work with less stress but it seems that still doing some kind of work helps to keep you happy.

Ms. Lagier believes that there are seven traits happy retirees share.  I believe that you have a better chance of reaching each trait if you have enough money when you retire. The secret to having enough money when you retire is to start your journey to financial independence today.  These reasons should convince you.

1)  “Good health. Enjoying good health is the single most important factor impacting retiree happiness. Retirees in poor health are nearly 50 percent less likely to report being happy, trumping all other factors including money and age….”

Without money at retirement age, it will be difficult to think positively.  You may need to work on a stressful job to earn more money, if someone is still willing to employ you.

2) “A significant other. The same study found that married or cohabiting couples are more likely than singles to be happy in retirement…”

Enjoying retirement together means having some, not necessarily big amounts, money to spend together.

3) “A social network. Having friends was far more important to retirement bliss than having kids.”

But getting together with friends will always cost some money, no matter how simple.

4) “They are not addicted to television. After you retire you will have lots of time to fill. A direct negative correlation was found between the amount of TV watching and happiness levels: unhappy people watched more TV and happy people watched less.”

Most people addicted to TV probably have no money to spend outside so they are stuck at home.

5) “Intellectual curiosity. Adults over 70 who choose brain-stimulating hobbies over TV watching are two and a half times less likely to suffer the effects of Alzheimer’s disease…”

Intellectual curiosity is not just related to hobbies.  For example, even if retired, you still need to learn operating the cellphone, the computer and any other new invention.  Intellectual curiosity is also related to exploration of other places, which means travel that you can afford.  As you see, all of the above need money.

6) “They aren’t addicted to achievement. The more you are defined by your job, the harder it will be to adjust to life without it. According to Robert Delamontagne… achievement addicts have the most difficulty transitioning to retirement.”

7) “Enough money. Of course you’ll need enough money to support your chosen lifestyle in retirement. But beyond that, more money will not make you happier. The Watson Wyatt survey found that the absolute amount of money you have for retirement is less important than how your retirement income compares to your income before retirement. If you have enough to continue your pre-retirement lifestyle, you have enough.”

This is exactly we need to prepare our own personal financial plan.   While you need money when you retire, you have to know how much you really need.  This can easily be calculated and this is explained in the books I have written.  We also discuss this in the seminars that we give.

Very few can just keep on saving and investing their money all their life without some enjoyment.  Enjoyment is especially needed to reward yourself when you have done well in your investments.  Your personal financial plan will tell you what you need to save regularly and if you can save more than that, you will reach your goal earlier.  If you want to enjoy a little and not just save all the extra savings, then, by all means do so.  After all, if you are too old and you accumulated too much money that you can no longer enjoy, you might regret not having had a little more enjoyment when you still could.  Balance is always the key to a happy life.

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