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Common Misconceptions in Retirement Planning
It is already given that there are a lot of Filipinos that are still not financially literate. While there are people who have access to financial financial education, there are those who are afraid to learn about being financially literate. Why? A reason behind this is that there are misconceptions about financial literacy. These misconceptions about retirement planning, investing, and in being financial literate stops people from being ready for their future. That is why it is important to get things right and know whether these misconceptions are true or not.
Misconception #1: Too Young for Retirement Investing / Planning
Many people think that retirement planning is for those who are nearing the retirement age thus young workers tend to disregard planning their retirement early on. But the truth is, it is actually better to start planning and investing for your retirement at an early age or during the start of your career. Starting early allows you to have better choices later on. You can choose to invest your money in other investments apart from keeping it in a bank. In your investment, there is a bigger possibility for higher returns compared to what the banks can offer. The monthly premium that you will also be paying is smaller compared to the premium you will pay when you are older if you decide to avail an insurance package or a retirement package. That is why it is important to note that the earlier you start on planning your retirement, the better.
Misconception #2: Government Pension Is Enough
In the Philippines, there are two government-owned and controlled corporations (GOCC) that provide insurance for the Filipinos. First is the Social Security System (SSS) which provides insurance for the private, professionals, and the informal sector in the country. The members pay monthly contributions in exchange of a replacement income when a member experiences illness, disability, maternity, old age, as well as death. The second one is the Government Service Insurance System (GSIS) which also provides the same benefits mentioned above but this time for government employees. There is no doubt that these agencies would help in providing additional income when you retire. But this may not be enough especially if your lifestyle requires a larger amount of funding. That is why it is important to place your money in different investments that would give you additional income in order to meet your lifestyle. It is important to carefully plan your retirement.
Misconception #3: Retirement Only Requires the Bare Minimum
Many Filipinos think that when you retire, you only need the bare minimum. The thinking is that you only need just enough for you to survive on a daily basis. But that should not be the case. Your life after working is called the “golden years”. And your golden years definitely does not definitely mean living with the bare minimum. It is important that you enjoy your fruits of labor. After tirelessly working for years, you should be able to enjoy your retirement by having vacations and even an active social life. You should be able to do things that make you happy as you deserve it. That is why it is important to carefully plan your retirement so that you can maintain or upgrade your lifestyle upon retirement.
Misconception #4: Any Retirement Package / Fund Is Enough
A common misconception in retirement is that any type of retirement package / fund is enough. People should bear in mind that your retirement fund package should be customized in accordance to your needs in the future and your resources in the present time. You should find investments or retirement funds that bring passive income that is also cost-efficient with low management fees in order to maximize your earnings. Your retirement fund should be in accordance with your financial profile, future needs, and your resources in the present time. This way you can carefully plan your retirement and be able to live a life you expected to have in the future.
Misconception #5: No Need To Increase Retirement Fund as Income Increases
Another misconception that exists is that people think that there is no need to increase or upgrade your retirement fund as your income increases. Many people think that just having a retirement plan is already enough. A bigger income could bring better protection for you and your future. If you decide to increase your retirement funds or investment, you can generate additional earnings or a wider coverage. A wider coverage and additional income would give you a better lifestyle upon retirement and will also make you feel at ease. That is why it is vital to see and seek better opportunities for your retirement plan.
Source: https://www.bpi-aia.com.ph