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We oftentimes say, life begins at 40 and for some, it means it’s time to get serious with life but do we really start when we are already halfway though life?
“The day you plant the seed, is not the day you eat the fruit.”
Dr. Sanjay Tolani
With life expectancy of 80 years, 40 means we only have 20 more years or 7,300 days to make a difference in either being financially independent in our old age or being a burden to our children, who, by then, would have their own responsibilities to a carry.
Life begins at 40 should mean, we have done a pretty good job at preparing for the best phase in our lives by the time we are halfway through life. Then and only then, can we say, that indeed, life begins at 40.
Look back…have you done what you should have done? Your answer must give you the urgency to either do more or continue what you have started. As Tennessee Williams said, You can be young without money, but you can’t be old without it.
For more appreciation of this concept, watch Dr. Sanjay Tolani’s you tube video on 28,000. It will make you do a reality check just as it did to me. https://youtu.be/hV_rDPEpLEc
We always hear this aspiration in life: “I want to be financially stable” and oftentimes when we probe what this exactly means, we hear answers like: I want to give my family more than what they need, my children will be able to finish the degree they want and live a comfortable life now and in the future.
In a study conducted by the National Economic Development Authority (NEDA) to define the “Life Filipinos Want”, an overwhelming 79.8% said they want a simple and comfortable life and by that, the study revealed, we want to live in a house we own, have a car, being able to have our children finish school, have money for our daily needs and being able to travel occasionally. Filipinos’ aspirations are very family-centered which even includes the ability to take care of our ageing parents reflective of our close family ties (https://youtu.be/WT1mXV8TqN4)
Sad to say though, a lot of us, never get to do all that we aspire for. In the process, we either delay or downgrade our plans and most often than not, it is because we failed to prepare. The good news is the fact that more and more Filipinos are improving the amount of disposable income they have as we progress towards an upper middle-class society. However, we need to change our attitude towards financial planning to truly enjoy the kind of simple and comfortable life we aspire to have.
For a family with children, I include their education as part of the daily needs especially if they are already of school age now and I strongly suggest that a College education fund be set-up while they are young that goes side by side with setting-up your retirement fund. One big mistake that a lot of Filipino parents do is to set aside saving for retirement in favour of setting up our children’s education fund and run the risk of running out of time to build-up enough to become self-sufficient in our old age.
Most Filipinos keep just one account, whether in the bank or investment funds for these 3 requirements so the tendency is we spend for daily or emergency needs what could have been for retirement. To avoid this, we should have 3 different programs for each and make sure you invest or save in funds that match your needs. Short-term needs should be in easily accessible funds while long-term needs (10 years or more) in aggressive funds that offer better returns. A rule of thumb is to set aside 5% of your annual (or monthly) income for education fund (if your children are still very young) and 20% for your retirement fund (to give you more options on what to do and continue to be productive in your golden years); build an emergency fund equal to 6 months of your cost of living and do not touch it unless it is for emergency and full-proof your financial plan by having income protection coverage (ie life insurance and health insurance) ideally 10 times your annual income (there are many insurance products that can give you the security of a big coverage that is easy on your pockets and the younger you are, the lower will your premiums be).
Think about it as having 3 wallets – each serving a specific purpose. You can never over-save or over-invest. Include funding your financial plan in your priorities. You will thank yourself for this.
When you turn gold (in age, that is), you start thinking what will be your next phase? When will you retire from corporate work or if you’re an entrepreneur, is your succession planning well in place? I’m in this phase in my life now and as I think about it, I’m putting more details on how it will be when everyday is Saturday.
Yes, I’m referring to retirement. That phase in our lives when we change gears and embark on a new adventure. That’s how I look at retirement. It’s wrapping up a life stage to start a new one where I can give more time and attention to some meaningful ventures that I have set aside because I am tied up with many responsibilities as an employee. Retirement may mean slowing down on deadlines and deliverables but never an end to a meaningful and productive life. In fact, it may just be a more meaningful phase awaiting.
I’ve been working in the corporate world for over 3 decades and while there were work weeks that extend until weekends, there were more weekends spent to rest and re-fuel and when I have the whole Saturday for myself (I mean, when there’s no work to attend to), it feels so good! So, I imagine retirement as everyday being Saturday. Heaven, right?
But wait, can I really live a life doing practically nothing? I don’t think so and that is why it is important to plan. I want to continue to have a meaningful and productive life in my next phase and I can only achieve this if I planned ahead for it.
My journey in the corporate world had been long and exciting and I will share with you the planning process I implemented to prepare for yet another exciting life stage in my succeeding articles – the good steps I took and the missteps that we can learn from.
For starters, here’s what you can do now to start the planning process towards a comfortable retirement. If you do it right, you may not even take 30 years before embarking on this phase. The key is starting it early:
Envision the future that you want
Know the price tag of that future that you want
Start paying for that future now while you can still do it on installment basis.
So how will it be for you when everyday is Saturday?