Why most Filipinos can’t retire yet at 60

Due to low personal savings set aside for old age, a salaried Filipino typically falls short of about P4 million to maintain a comfortable lifestyle during retirement, according to the results of the 2018 Manulife Investor Sentiment Index (Misi).

Misi—which surveyed middle- to high-income Filipinos aged at least 25 with personal income of more than P30,000 a month and an education attainment of at least high school level—showed that Filipinos only have 3.6 months’ worth of personal income set aside for retirement.

This makes the Philippines the bottom-dweller in the Asian region when it comes to personal income saved for retirement, Melissa Henson, Manulife Philippines chief marketing officer, said in a briefing on Friday.

On average, Asians have enough retirement savings equivalent to 2.9 years’ worth of their income. Investors in Taiwan have the highest retirement savings, with personal income set aside good for 4.5 years.

The Chinese and Indonesians have retirement savings that can last for 4.1 years.

The average retirement savings gap of P4 million across all age group is an estimate of the difference between the buffer the respondents think they should have a decade into retirement and how much savings they have at present. This is based on the average life expectancy in this part of the world of around 69 to 70, relative to the retirement age of 60.

According to Henson, one key reason why Filipinos typically earmark a smaller amount for retirement compared to regional peers is that Filipinos think the amount is already sufficient for retirement.

Based on the survey, Filipinos believe that savings equivalent to 2.1 years’ worth of personal income is enough to live on postretirement. This was seen remarkably low compared with the regional average of 12 years.

The Taiwanese believe they must have 19.6 years’ worth of personal income in order to retire comfortably while in China and Hong Kong, the bar is set at 15.4 years’ worth of personal income.

The same survey showed that 84 percent of Filipino investors thus look into continuing working after retirement, either on a full-time or part-time basis. Top reasons for active retirement across age groups include keeping busy and occupied (66 percent), physical and mental health (65 percent), pursuing interests and enjoying life (63 percent), as well as financial considerations such as maintaining or improving living standards (59 percent), and saving additional money for the future (56 percent).

Apart from saving enough money before retirement, the survey showed that many respondents also tend to actively manage and invest assets to generate additional income and increase value of portfolio over time. Many also aspire to own fixed assets, like real estate.

Other respondents, on the other hand, expect to maintain living standards by reducing expenditure on unnecessary items, seeking financial expert of advice, relying on government financial aid, and relying on the financial support of children and relatives.