Retirement blues

A SURVEY conducted recently by multinational insurance company Manulife Asset Management showed that the majority of middle class and affluent Filipinos who engage in financial investment activities are comfortable about their retirement in the future.

The study indicated that the average age the respondents—aged 25 years and above and the primary decision makers in their households—started to plan for their retirement was 35.5 years. Those who have not made plans said they intend to do so starting at age 41.

The report further stated that “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.”

In planning for that inevitable, Manulife pointed out that three critical factors should be taken into account, namely, expenses are not likely to drop significantly during retirement, life expectancy has become longer, and inflation may erode the purchasing power of retirement savings.

Thus, without sufficient retirement preparation, retirees may later find themselves in financial trouble or be forced to look for other means to shore up their funds at that critical period of their life.

Procrastination

The underlying message of the survey is, future retirees should plan their retirement as early as possible so they can save enough funds to sustain the lifestyle they want to enjoy without seeking assistance from their family or engaging in part time work.

Going by Filipino standards, these findings do not come as a surprise. It jibes with the procrastination or “beating the deadline” attitude of many of our countrymen, i.e., waiting for the last minute to do things that are supposed to be done or could have been done earlier.

The idea of retirement is treated like death. Saying goodbye to this world for good is inevitable; it will happen, sooner or later, but many would rather not think or talk about it.

Planning for death has been likened to wishing it to happen. This is the reason why most Filipinos are averse to buying life insurance or other forms of insurance for natural or man-made contingencies.

Retirement is something that people at work or in business have to confront when they reach a certain age, or circumstances beyond their control (such as, business closure, retrenchment or health reasons) happen that force them to call it quits.

Given this frame of mind, it helps that some companies have put up retirement plans that require their employees to build savings through salary deductions, or otherwise encourage them to invest in collective investment schemes, e.g., mutual funds and unit investment trust funds.

The returns from these programs can supplement the pension that employees in the private sector will receive from the Social Security System (SSS) when they reach retirement age.

Unless the government overhauls the present system, there is absolutely no way a retiree can survive, much less be able to pay his medical bills, from the meager SSS pension.

Changes

Although the survey was limited to a select sector of our society, its findings are instructive to all who will one day, whether they like or not, be obliged to quit their employment or business.

They should bear in mind that comfortable retirement requires prior financial and emotional preparation.

For entrepreneurs or businessmen, retirement may mean slowing down in the day-to-day management of their business and letting their successors (whether their children or professional managers) run it with minimum supervision.

For fixed income earners, life after retirement depends on how much money they’ve set aside to meet their financial needs or, as in many Filipino households, the ability of their children (assuming they are in good terms with them) to assist them financially in their grey years.

Setting aside the monetary issue, the toughest parts of retirement are primarily psychological in character.

A sudden change in the lifestyle that a person has been used to for, say, 25 or 30 years, is not easy. For people who hold jobs that require them to report regularly for work from 8 a.m. to 5 p.m., Monday to Friday, the cessation of that routine can result in serious adjustment problems.

The loss of day-to-day professional and social interaction can often be unnerving. The retiree suddenly finds himself without the company of the people he used to talk to during break time, have lunch with, or shoot the breeze with during slack work periods.

Adjustment

The professional challenges that the retiree used to face every day, which were either exciting or boring depending on how he treated them, will no longer be there.

With so much time in his hands, the retiree has to look for ways to make his day productive or meaningful, something he took for granted or was part of his daily work routine.

If the retirement nest is full and the children have lives of their own with financial independence, the retiree can travel to places he once dreamed of going to or engage in activities he had earlier wanted to do but was unable to due to pressure of work or business.

Regardless of the retiree’s financial health, it is important that he makes adjustments in his new way of life and find ways to make it worthwhile. Otherwise, he may suffer from bouts of depression which sometimes lead to undesirable consequences.

A financial analyst of an American bank said the formula for feeling confident in retirement consists of three parts: “The first is being in control of your retirement decision. The second is the right financial preparation, and third is the right emotional and social preparation.” For comments, please send your e-mail to “[email protected].”