6 Ways To Avoid Being Broke On Your Retirement

Last week, my mother and I had a conversation on the provincial bus going back to Manila. We talked about the number of investments my mom and my dad had been taking out of their retirement funds. I replied,

That’s nice Ma, but what about investing in your future?

Filipinos are often excited with the prospect of the earning potential of high-risk investments like stocks or businesses. However, Filipinos should also pay attention to investments that have little to medium risk of losing money.

Here are the 6 basic retirement benefits every Filipino should invest in:

1. Paid-off Home

Owning a home is a sign of wealth in the Philippines. Buying a home is almost always the result of all the money saved from working for a number of years. As such, many Filipinos resort to working abroad in order to earn dollars and make that dream happen before their retirement. But do you know that one way for you to earn money is by simply owning a home? Check out the video below on how to make your home work for you:

Minimum Investment: Your P100 monthly contribution to Pag-IBIG allows you to avail a home loan amount of up to P6 million.

Return: Owning a home provides retirees either huge savings in rent or mortgage payments or earn extra by selling the home on a markup.

2. Social Security

Social security is a social insurance program that provides retirement and health benefits to enrolled members. There are two types of social security in the Philippines. The Philippine Social Security System (Paseguruhan ng Kapanatagang Panlipunan or SSS) caters to private employees while the Government Service Insurance System (Paseguruhan ng mga Naglilingkod sa Pamahalaan or GSIS) services government employees.

Minimum Investment: P110.00 per month for SSS members. Employed members get to pay only half of the contribution amount, as employers by law are expected to cover the other half. GSIS members with a basic monthly salary of P16,000 pay P1,440.00 monthly.

Return: For SSS members, they get P1,200 plus an additional 5% for over 10 years of service. For GSIS employees, members can also get disability and death benefits as well.

3. Philhealth

The Philippine Health Insurance Corporation (PhilHealth) is the country’s national health insurance program that aims to provide affordable medical care. Just this year, President Benigno Aquino III signed an act that automatically enrolls all senior citizens for free.

Minimum Investment: P200 monthly. Employed members only pay half, with the other half covered by their employers. Individually paying members contribute P1,800 yearly, while OFWs pay P1,200 annually.

Return: Members will get a comprehensive medical care package as detailed here, which includes coverage for medically difficult and expensive treatments and procedures.

4. Mutual Fund

By definition, a mutual fund is a pool of money collected from investors for the sole purpose of investing in tradable assets like stocks, bonds, and securities. The fund is managed by a professional fund manager who maintains a group of these assets.

Return: On average, your original investment could earn an annual income of 8% to 20%.

5. Savings Account

Putting money aside in a savings account in the Philippines may have the least amount of benefits offered to a depositor. On the other hand, keeping money in a savings account provides Filipinos the accessibility of a contingency fund in case of emergencies. Withdrawing money from a savings account requires little to no fees and dissuades Filipinos from spending the fund on non-essentials.

Minimum Investment: P100 initial deposit

Return: Major banks offer as low as 0.250% and as high as 0.50% in interest on savings accounts.

6. Employees’ Compensation (EC) Pension

The Employees’ Compensation is a program managed by the Employees’ Compensation Commission of the Department of Labor and Employment for the purpose of providing both public and private employees compensation in case of work-related emergencies like sickness, disability, or bereavement.

Minimum Investment: None. Employers contribute P10 monthly per employee until the latter leaves the company or upon bereavement.

Return: Upon bereavement, the family will receive P20,000 in funeral benefits. Members who are temporarily or permanently injured can claim for disability income cash benefits aside from medical assistance.

Would you know of any other benefits Filipinos should have before they retire? Share them by leaving a comment below.