Afraid of early retirement? You don’t have to be

RETIREMENT is not just about enjoying a long vacation, but also about staying productive.

Many corporate executives get the chills just thinking about the word retirement.

We have this joke in the corporate world: In our 30s, we think about retiring. In our 40s, we worry about retiring. In our 50s, we hyperventilate about retiring.

I searched Google for a definition of “retire” and this came out: “Leave one’s job and cease to work, typically upon reaching the normal age for leaving employment. Synonyms: give up work, stop working, and stop work: pack it in, call it quits.”

Retirement always has two faces. We either look forward with optimism to enjoy life and be free, or be scared to end a professional career. We either look at our potential future, or fret about the power and position we will lose.

We either celebrate milestones, more family bonding and travel, or become thrifty to preserve our retirement nest egg.

The dictionary is half correct. We only retire from a job, but never from life.

Assuming that you have a company retirement package, the first challenge is to know where to put your hard-earned money.

Get-rich-quick schemes

Should you bank with institutions? Should you bank with friends?

I’ve seen a lot of my retiree friends fall into the “get rich quick” schemes of unscrupulous people.

They banked on the promise of doubling their money in just a few months, but lost it all instead.

Reality: Your retirement money will not grow—and will, in fact, disappear—if the dream is to double the money in a short period of time.

People ask me if there’s a way to double their money immediately. I point them towards the building across the Ninoy Aquino International Airport Terminal 3, where you find a casino.

But, I also warn them that they can lose it all immediately as well.

Every so often, people get into Ponzi schemes primarily out of greed rather than stupidity.

The other challenge in retirement has to do with our pension from the Social Security System and the Government Service Insurance System. Both my uncle and aunt are retired teachers. My uncle receives P5,000 a month, while my aunt receives P6,400 a month.

Summed up, they get less than the equivalent of minimum wage—definitely not enough to provide them a comfortable retirement.

Useful information

It’s alarming how a typical Filipino will not really bother to check the inflation rate versus bank deposit rates on their money placements.

What they seem to always know is the dollar exchange rate, which is useful when calculating the remittances of relatives from abroad.

Reality: Money will only grow if you are cautious and curious enough to ask the advice of people who have succeeded in that particular kind of investment (enterprise, estate, equities, financial instruments and mutual funds).

Be careful with free advice that is followed by a sales pitch. Good financial advisors charge for consultation, but they are not agents of any financial instrument.

Let me share an actual retiree’s story.

There’s an executive secretary who worked for a multinational company. The principal makes one of the best Belgian chocolates in the world.

When the Philippine subsidiary was established, she was employee #2. After 17 years, the news of a merger with a Singaporean-listed company was in the air.

There was excitement mixed with anxiety because of the “rightsizing” of the Philippine operations.

She was given an “attractive” retirement package equivalent to two months’ worth of salary for every year of service, tax-free.

It was a no-brainer, but the lump sum she got for 17 years of service was not even close to a million pesos.

The retirement money was placed in a special depository account through a money market fund, earning 1.3 percent a year.

However, the account generated only P9,100 a year. Realistically, that amount can only buy a year’s supply of cooking gas.

The executive secretary is my wife.

The sad reality is that money does not grow on trees. It does not grow in banks either, especially in savings accounts.

Living on interest (LOI) alone will never sustain a comfortable retirement. You need to understand the other vehicles of investment. If you yearn to earn, you need to yearn to learn.

I’ve seen some of my colleagues who have deteriorated in their retirement days.

So many people have the wrong notion that retirement is like a corporate abyss, that after enduring the long, hard and steep climb, it ends at the top and nothing is left for you to do but to fall or roll down.

Most new retirees fall into depression, thinking that they need to re-equip themselves and acquire new skills to live through retirement.

In fact, we should keep on doing what we have been good at doing.

Many think that retirement is just about vacations at a farm or cross-stitching.

For some, it’s about more sleep, more time to watch or eat in front of the TV or endless hours of surfing the Net.

Reality: Retirement is about the time to recover lost moments with family, friends, and especially yourself.

It’s about catching up with lost time, while there’s still time left, especially with the kids.

You’re retired, not retarded. You’re retired, not expired. You are retired and renewed.

Happy retirement is not a function of money or age. It is a function of your mind (mindset), if you’re willing to be happy.

No ideal age

You can never be too young or too old to retire into something that you love to do. If you know what you’re retiring to, you will never be tired or depressed; because every morning, you’ll be energized to do something meaningful.

Retiring early does not necessarily compromise your ability to buy things. In fact, it will give you the freedom to be who you want to become.

Early retirement is about having enough funds to live on, but more importantly having enough fun to live for.

(The author is dean of the Entrepreneurship Circle of Bo Sanchez’s Truly Rich Club and a lead advocate of the Philippine Center for Entrepreneurship Foundation Inc.-Go Negosyo. He is also an adjunct faculty on Entrepreneurship at the Asian Institute of Management. For happy retiree and entrepreneurship seminar-workshops, call 0916-6725070 or e-mail [email protected].)