Filipinos saving for retirement too late–Manulife

The majority of Filipino investors—mostly from the middle class and affluent income segments—are confident about their future, but many of them begin planning for their retirement late in life, the Manulife Asset Management said in a study.

“Expenditures are unlikely to fall significantly during retirement and people could live in retirement longer than expected. Investors also need to take into consideration the effect of inflation, which erodes retirement savings by lowering purchasing power and therefore living standards,” Ryan Charland, Manulife Philippines president and chief executive said in a press statement Monday.

Citing the latest Manulife Investor Sentiment index (ISI), the global insurer said 93 percent of Filipino respondents were confident of the level of their resources upon retiring. It also showed 82 percent had already started planning for their retirement.

The study revealed that the average age when Filipino investors start their retirement planning is 35.5 years. Among those who have not started planning, the average age at which they intend to begin is 41 years.

The study also showed 26 percent have commenced planning for their retirement, but only upon reaching their 40s.

The respondents of the Manulife ISI are middle class to affluent investors, aged 25 years and above, who are the primary decision makers in their households and currently have investment products.

With more than half of Filipino investors (56 percent) expecting to retire between the ages of 51 and 60, many may not be devoting enough time for retirement planning, Manulife said.

A 41-year-old Filipino only has around 19 years to save enough for retirement. A married couple, on the other hand, will have 21 years to plan for a comfortable future.

“We encourage investors to plan for retirement early to increase their chances of having enough to support the lifestyle they want once they retire, without having to depend on family or additional sources of income,” Charland added.

The survey also showed investors preparing for their retirement earmark an average of 12 percent of their monthly income towards retirement and wealth accumulation. They expect 58 percent of their retirement income to come from cash savings and insurance savings products and pension, 13 percent from a full or part-time job, and 11 percent in the form of financial assistance from the family.

The study also showed 97 percent make mandatory contributions, while 64 percent make additional voluntary contributions. Manulife Philippines chief investment officer Aira Gaspar urged Filipinos to make regular contributions to a diverse portfolio of investments.