While I have not retired, have not cashed in nor received my retirement pay, I must be getting old as I have friends who have recently retired. Depending on their management positions, their length of service, and the size of the companies they worked in, their retirement amounts are between P2million and P20million. While these are fairly good amounts, it may or may not last long depending on how it is invested and how long one expects to live after retirement. If one retires at age 65, given the life expectancy of a person at this level of social and economic status, we can fairly say that he or she may live another ten to fifteen years. Then of course, we can expect certain medical expenses that we will be incurred, with the company no longer picking up the tab on this since retirement. Philhealth coverage may not be enough, depending on one's sickness. Given these realities, we should really manage our retirement benefits and manage them well.
First, we need a retirement plan, which we should have thought of and put in writing, the year before we retire. What to do? Work again on a contractual basis, go into a business, go into farming, or just be a person of leisure. Are there other reliable income that will continue after retirement? Are the loans paid?, Will we still have to spend for the children? Are the children abroad sending money regularly? All of these will come into our plan, so that we can make a monthly budget of income and expenses to let us live for another ten to fifteen years with a minimum of stress.
We now have to allocate our retirement pay to certain investments that will allow us to get the income/cashflow that is needed in our plan. Aside from the usual time deposits and money market placements offered by the Banks, there are now a variety of financial instruments in the market for liquid investments. There is the Unit Investment Trust Fund (UITF), which have no guaranteed returns but may give better returns in the medium term (2 to 3 years). There are a number of mutual funds offered by Insurance companies and Banks which have even higher returns, but which require longer terms to get the best results. There is also the Stock Market, which has been jumping lately, but is of a higher risk, as it could eat on the principal. All of these are available investment for our Retirement Funds, we just have to be definite on the allocation of the funds to suit our cash requirements, and understand the risks and costs of these investments. What we should not do is put our retirement money in high interest deposits in Banks or Institutions of dubious reputation in the hope of making a high return on our investment. We should remember that a lot of retirees lost their life savings in the pyramiding scandal some years ago, and they never got their money back.
As to going into business, be very careful of what business to go into, and how much time and money will be put into business. If you are quite certain that you know and understand the business and you will spend time on it, then you can allocate a portion of your funds. But if it is going to be run by a friend of a friend, and you will be a passive investor, think again. Maybe you're better off in a mutual fund.
Lastly, always rethink on what we really need to live a happy and comfortable life.Maybe only half the cash inflow that we were used to when we were working. We will not need that many clothes, nor to go to eat out much, entertainment expenses could be lowered, etc. As a wise man had said, " There is always enough to satisfy man's needs, but never enough to satisfy man's wants."