If you are a young professional and you wish to retire without worrying about your financial health, getting a retirement plan is the best thing to do. However, you might say that having a government pension from agencies like SSS and Pag-IBIG is enough. Are they? Let’s talk about government pensions in this blog and why you should not rely on them.
What are government pensions?
Government pensions are funds coming from the government. The most popular source of pension funds in the Philippines is SSS. To get your pension from SSS, you have to be a member of the SSS and you should be paying while you are currently employed. When you retire or when you reach the age of 60, which is considered a senior’s age in the country, you will then get your pension in a lump sum or on a monthly basis.
Some pensioners take out their pensions in a lump sum. So, what does this mean? This means that you can opt to get the pension all at once. More often than not, the amount can reach up to a million or so, depending on the amount you contributed when you are still employed. If you choose to receive your pension on a monthly basis, you will receive fixed and equal pensions every month.
Catch me in my live training events! (quick plug)
The heart of why I do these seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more about how you could time the market check out the training below.
Stock Smarts Zoom Technical Analysis
Stock Smarts: Live Traning Fundamental Analysis
Stock Smarts Book Series
Do you need a different pension source?
Now, the question is—do you need a different pension source or should you just reply on your government pension? My personal verdict is this—you need another source of pension. You need another retirement account to pay for your retirement someday. Whether the fund comes from insurance or other retirement accounts, it’s worth it to get a pension stream different from SSS.
Why get a different retirement account?
Simple, you can’t rely on SSS or government pension that provides a little amount as your monthly income when you retire. Remember that when you retire, the only income source you can retain is your pension, unless you own different assets or businesses that can sustain your lifestyle. Financial-wise, having a different retirement account can help you finance your retirement dreams. Travel abroad, buy a house where you can retire, turn your passion into a business. There’s a lot you can do if you have enough money when you decide to leave your work.
Where can you get a different retirement account?
The most popular source of retirement funds here in the Philippines is insurance, specifically VUL. Since VUL has insurance and investments at the same time, you can use the investment portion to finance your retirement. If you don’t have other sources of income, this is the best way you can get retirement funds already.
Actually, you don’t have to be rich to be financially free when you retire. What you can do right now is save up for your early retirement. Your goal should be financial freedom. And, you can only do that if you don’t rely solely on your government pension.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
