Written by Jomarc Angelo M. Corpuz, Special Features and Content Writer, BusinessWorld
All roads lead to retirement. After graduating from college, working for decades, and moving up the career ladder, many Filipinos eventually retire to rest and reap the fruits of their labor. Although that stage of life may seem far away, it is actually one of the most important stages to prepare for ahead of time.
According to a study by World Finance, Filipinos believe that saving the equivalent of 2.1 years of personal income is enough to retire, a few months below the regional average of 2.9 years and a few years off for those who choose to retire early. In the Philippines, the optional retirement age is currently 60, while the mandatory age is set at 65. Although the numbers are still affected by deaths during the epidemic, the latest data from the World Health Organization shows that the country lives 66.4 years. This means that Filipinos will have to fund between 1.4 and 6.4 years of retirement after leaving their main source of income.
“Many Filipinos are not well prepared for retirement. A large number rely on family support, limited savings, or only mandatory benefits. The challenge is not only income, but also delayed planning and low awareness of how much it takes to prepare for retirement,” Raymond Benedict C. Zalamea, President and CEO of retirement consulting firm EM Arial Services, said Actual Services.
“In general, Filipinos are not well prepared for retirement, and there are many factors that contribute to this. Among other factors, first and foremost, we are a cash-intensive economy; we spend a large part of what we earn and even the money we have not yet earned,” said Rafael G. Ayuste, Independent Director of the Commercial Bank.
The facts mentioned by Mr. Zalamea and Mr. Ayuste highlighted the urgency of financial adjustment and emphasized the need to start planning for retirement before one starts earning to ensure long-term security and stability during retirement.
“The good thing is that people should start as soon as they start earning. Starting early gives savings more time to grow and makes discipline easier. In retirement planning, time is one of the biggest advantages a person can have,” he explained.
Meanwhile, despite the clear advantages of starting early, Mr. Ayuste explained that financial realities and competing responsibilities often delay retirement planning for many Filipinos until later in life.
“We have to be realistic; that cannot happen in the Philippine area. In addition to the reasons mentioned above, the salary base of the Philippines is low compared to the rest of Southeast Asia. In fact, if a person is looking to retire at the age of 60, then the first can start saving for retirement at the age of 40, after most of the family responsibilities have grown or the income is free and partly grown,” he said. said.
Explaining how to start planning for early retirement, Mr. Zalamea notes that the foundation of successful retirement planning lies in establishing good financial habits early on that allow young Filipinos and retirees to save for their later years.
“The first steps are financial awareness, self-discipline, and consistency, which means learning to plan a budget, avoid unnecessary debt, create an emergency fund, and always set aside money, even if the money is small. Planning for retirement starts with good habits,” he said.
Building on this emphasis on early practices, Mr. Ayuste shared that the next important step is to translate financial discipline into a clear and meaningful retirement plan.
“Time is a big advantage for young people, because compounding works best if you are given many years. Retirement planning is not something you start in your 40s or 50s. The more choices and freedom you have later in life,” he said.
Likewise, Mr. Zalamea also highlighted that the goal of retirement planning is an ongoing process that requires discipline and awareness rather than a one-off effort. He said that over time, consistent financial practices and informed decisions will ultimately lead to long-term security.
“Starting early, staying organized, and building financial awareness are very important. Budgeting, debt management, emergency savings, and ongoing financial education all play a role. In most cases, retirement security is not built with one big decision, but by maintaining good habits over time,” he added.
In addition to building strong financial practices, Mr. Zalamea also highlighted the need to consider social and cultural factors that influence retirement planning. Since the Philippines is a family-oriented society, he stressed the importance of balancing personal financial security with the Filipino culture of supporting your family.
“Supporting the family is part of the Filipino culture, but people need to prepare for their future. The goal is balance. People should help where they can, but also maintain boundaries, follow a budget, and continue to build their retirement fund. Preparing for one’s retirement is also a way to protect the next generation from future financial burdens,” he said.
Emphasizing this balance between personal responsibility and family obligations, Mr. Ayuste stressed the importance of discipline in managing the financial pressures that many Filipinos face, especially those who support the older and younger generations.
“Being part of the sandwich generation is a real and personal situation for many Filipinos. If there is one piece of advice, it’s discipline. Discipline means learning to distinguish between needs and wants, and having the courage to say no to what we want… The goal is balance: taking care of our loved ones while setting aside resources for retirement. Because ultimately, preparing for our own retirement is a way to protect our family and is our way to the future,” he said.
This consideration becomes even more difficult when viewed against the changing demographic landscape. Currently, the Philippines has about 7.6 million Filipinos aged 60 and above. By 2032, this number is expected to rise to nearly 9 million or 7% of the population, making the country an aging population. This means that many people will have to rely on savings and other institutions to fund their retirement.
The Philippines’ Social Security System (SSS) provides a monthly pension ranging from P2,200 to about P30,000 to retirees, depending on the reforms.
“The SSS and the Government Service Insurance System (GSIS) are important because they provide a basic framework for retirement support. For private sector workers, the retirement benefits under RA 7641 add another layer,” said Mr. Zalamea.
Despite the existence of these institutional support systems, gaps in retirement funding remain a concern for many Filipinos. Mr. Zalamea said this supports the importance of strengthening savings and investment strategies and existing benefits.
“However, even when combined, this is often not enough to support the kind of retirement that many people would want. This is why personal savings and investments remain so important, especially if started early and allowed to grow through compounding,” he explained.
“For many, the SSS pension of the private sector alone will not support a comfortable life in retirement. The cost reduction in retirement does not take effect immediately, it happens gradually. When costs are reduced significantly, the cost of health care kicks in. Filipinos, without a doubt, should prepare more savings or investments as part of their retirement planning,” said Mr.
Given these limitations, Mr. Zalamea emphasized the importance of turning financial awareness into concrete action. He noted that starting early, even with small, consistent steps, can greatly improve a person’s chances of a secure and sustainable retirement.
“Retirement planning should not be postponed. You don’t need to start big, but you need to start. Small and consistent steps taken early can make a meaningful difference later in life. The important thing is to move from awareness to action,” said Mr. Zalamea.
This article comes from BusinessWorld In-Depth’s recent special edition with the Trust Officers Association of the Philippines for Trust Awareness Week. To get your free copy, go to https://bworld-x.com/product/free-beyond-today-a-modern-strategy-for-retirement-planning/.
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