Retirement is Not as Far as it Seems!

A typical person in the prime of his career and health, will not think of retirement. Why would you think of it if  it is as far as 20-30++ years?

But retirement is not as far as it seems!

When is the best time to plan for Retirement?

The best time to plan for retirement is the moment you received your first paycheck. The rule of thumb is to save at least 10-15% of your income for retirement.

Why the moment you received your 1st Paycheck?

A person works for an average of 40 years and retires at 60.

The average lifespan of a person is 80 years old. But let’s say that you have good genes and you live a healthy lifestyle making you live until 90-100 years old.

Based on this, a retiree will spend 20 to 40 years without any income. So if you start saving for retirement at age 50, will 10 years of saving be enough for 20-40 years of living?

That is the reason why you need to start saving the moment you start working.

But I have SSS/GSIS and Retirement Package from my Company!

Will your SSS/GSIS and Retirement Package be enough?

Let’s compute!

Let’s say that your average monthly expenses today is P20,000-P30,000 per month. By the time your retire, this will be different since there will be inflation and additional expenses such as medical and health care needs.

Let’s make it simple and just compute based on current expenses!

Based on this, you need at least P20,000-P30,000 per month to live for the next 20-40 years after retirement. (That’s a total of P4.8-P14.4Million)

SSS Pension

Based on the article of BusinessMirror, a person paying the maximum contribution of SSS for 25 years will just get P8,300/month. Her is a true to life story from a retiree: SSS Shatters Retiree’s Dream.

If you will rely just on SSS, you are short by -(P11,700-P21,700).

GSIS Pension

Let’s say you work in the government and your pension will be coming from GSIS. How much would it be?

If your average monthly compensation is P23,805 and your payment period is 32 years, your monthly pension will be P19,522.

You are still short by -(P478-P10,478).

Just to be clear, if you work in a private company or self-employed, you will be getting you pension from SSS. If you work in the government, you will get your pension from GSIS. (A government employee can have both GSIS and SSS if he chooses to pay voluntary in SSS).

For SSS and GSIS, you should also be able to complete all the provisions such as the number of paying periods, etc. For more info, visit their websites



Company Retirement Package

If you work in a private company, they are mandated by law, R.A. 7641, to give 22.5 days per year of service based on your most recent monthly salary.

So if you are earning P30,000 per month at the time you retire and you have served in the company for 40 years, your retirement pay is as follow:

P30,000 x 22.5/30days x 40 years = P900,000

So if you will live for 20 years, that’s P3,750 per month (P900,000 ÷ 20years ÷ 12 months).

If you will live for 40 years, that’s P1,875 per month (P900,000 ÷ 40years ÷ 12 months).

Add your SSS monthly pension of P8,300 per month, that is P12,050-P10,175 per month.

So is it enough? Of course not!

That is why there is a need for Retirement Planning.

Below is CommonCentsPH’s EASY and SIMPLE 5 Step Guide:


Keep track of your monthly expenses. I use the mobile app Spendee for this. More often than not it will be the same amount you would be needing when you retire.

When you retire, there will be a lot of factors you need to consider: you might not be paying for a house or car by then but you will be having additional medical and healthcare expenses; inflation will play a role; and your lifestyle will be a big factor too.

Just to make it simple, add an additional P10,000-20,000 per month on the estimated retirement monthly needs that you would be needing.

Just for example: Let’s say you would be needing P30,000-P40,000.

Retirement Planning is a process. It is not a one time thing. It should be done regularly. A wealth planner can help you in taking action, sticking to the plan, and reviewing it regularly.


When it comes to retirement planning, one should be realistic.

I know people who would like to retire by Age 40 but has no plan yet. How can they survive?

Maybe what they mean is that they will retire from the Corporate World and start a business.

Starting a business is not retirement. It is more stressful than the corporate life. It is working 24/7 with employees relying on you for their future.

When we talk about retirement, it is the state wherein you will no longer need active income. It is when you rely on your passive income or savings until you say goodbye to life.

Just for example: Let’s say you plan to retire at age 60 and enjoy it until age 80. That’s a period of 20 years.


In Step 1: You already know how much you will be needing in a month.

Let’s say P30,000-P40,000 per month

In Step 2: You identify at what age you would like to retire and up to when.

Let’s say age 60 until age 80. A total of 20 years.

In Step 3: Use this formula:

Estimated Monthly Expenses x 12 months x Number of Retirement Years

For the sample above, the needed retirement amount is:

P30,000-P40,000 x 12 months x 20 years = P7.2-P9.6 Million


Provisions made for retirement can be a company retirement savings plan, savings in the bank, or other investments intended for retirement.

Expected pension is the one discussed above.

Other passive income will include income from rental properties, dividends, business that is passively managed, etc.

Let say that you are expecting a company retirement package of P900,000 and your monthly SSS Pension is P8,300 ( for 20 years that is P1,992,000 = P8,300 x 12 months x 20 years) but you don’t have any other passive income.

Total Provisions is P900,000 + P1,992,000 = P2,892,000

Based on this, your needed retirement amount is P4,308,000-P6,708,000.


Now that you know how much you would be needing by the time you retire, start a plan that will make you systematically save for your retirement.

It would be best to ask for the help of a wealth planner for this. But look for a wealth planner whom you trust and you know that will put your best interest before his.

Just for sample purposes, here is a needed amount you need to save per month if you would be needing P4,308,000-P6,708,000 by age 60:

20 P8,975 P13,975
30 P11,967 P18,633
40 P17,950 P27,950
50 P35,900 P55,900

But if you can find a fund that earns a compounded interest of 10%p.a., this is the amount you just need to save:

20 P681 P1,061
30 P1,906 P2,968
40 P5,673 P8,834
50 P21,031 P32,747

To make it more visual, below is the typical life of a person:

We started earning on our 20s with a plan to retire on or before we reach age 60.

We usually spend the same amount we earn.

And when we get a bonus or additional income, a lot of temptations distract us to achieve our goals. It is very hard to turn down a piso seat sale, newest gadget, etc. especially if you can use your credit card which results to debt.

This Cycle Continues until it is too late and it would be very hard to save.

This is where a plan steps in! It makes SAVING & INVESTING SYSTEMATIC!

To end, always remember:


Your Millennial Wealth Planner,

Harold Q. Gardon, CWP, CEPP

How do you find the article? Do you have any questions? Please feel free to message me if you want me to discuss a particular topic or if you are seeking financial advice.

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