How Much SAVING do you need for your RETIREMENT?

" Vision without action is a dream.
Action without vision is a nightmare."

When a person will decide of starting to save. He might ask, How much should I save monthly? How much should an enough savings for my retirement?


How much should an enough savings for my retirement?

Well, there is a formula for that:
Annual Income X 10 = Total Amount of Saving

Example: Let's sayyou have monthly income of Php. 15,000
15,000 x 12 (months) = 180,000 Annual Income
180,000 x 10 = Php. 1,800,000.00

Php.1,800,000 / 1.8 Million is the total amount you must have the moment you retire and you must also invest it that earns 10% rate of return annually.

Why is that so?

1. When you invest the 1.8M in the 10% rate of return investment it will give you 180,000 annually.

Php. 1,800,000 x 10% = 180,000

2. You divide the 180,000 into 12 (months)

Php. 180,000
/ 12
________
15,000

Isn't is the 15,000 is your monthly salary when you're still working? That is what you call LOI or Living in Interest, by the mere interest of your 1.8M that you invest you can support your day to day expenses without asking to your children or bothering relatives or other poeple.

REMEMBER: Be careful of your Php. 1.8M because your supposedly retirement fund will become your own nightmare too, once you put that retirement savings of yours in an illegal investmnet or fly by night business that guarantees you easy and specific high rate of return. There is no such thing as easy and specific high rate of return because every investment and business involves risk. but in the long run ( as in long term of 5years - 10 years) your money will surely grow. And you can't risk your retirement fund that far, maybe your present condition might not handle that risk or retrieve your money in case it's lost.

BE AWARE: too of other people who would like to borrow your money and will promise to pay you. Other people includes your close relatives, even your beloved children. Money loan to other people is very very risky and most of the time no money back guarantee. For Christ's sake it is your retirement fund! It includes your children because by that time you might have gave them their education and having their own job. You've done your responsibility to give them education, so it's their responsibility to save for their own. You can't completely expect your children for your retirement, by that time they also have expenses raising their own family.

How much should my monthly savings?

1. In case your 30 y.o. right now and let's say your retirement age is 60 y.o., so you have 30 years of saving.
60 y.o. = retirement age
- 30 y.o. = age right now
_________
30 = years of saving
( 30 years x 12 mths = 360)

2. From the above example, Php 1.8M
1,800,000
/ 360
__________
5,000 = amount you should save monthly..

So, you must set aside Php. 5,000 each month of your salary for 30 years. 30 years is quite long, yet through investment facility (like Kaiser International) your saving period is shortened ( 5 years ) then let the interest of your money compound until its maturity.

The most secure and safest investment for retirement is Treasury Bills/Notes or Bond Fund. Goverment Securities/Bond fund is a fixed income investment. If you'd save as your retirement fund you may choose to put it in Mutual fund invested in Goverment Securities which is the Bond Fund for as low as Php. 5,000 of initial investment and Php. 1,000 as additional for subsequent investment.

Kaiser International

Kaiser International is a Philippines's Long Term Health Care Plan patterned from Kaiser Permanente, a care giver facility in the U.S. Long Term Health Care has a coverage of health care benefits above 60 y.o. when at the age you needed health care benefits the most ( age 60 is the time you're not working anymore and when diseases start to worsen ) while short term coverage is below age 60 y.o. mostly given by companies to their employees.


LONG TERM HEALTHCARE
Health Savings Account

1. Renewal is guaranteed
2. Fixed premium for 5 years.
3. With four(4) Way Insurance Coverage up to the Long Term Health Care Plan:
a. Term Life
b. Accidental Death & Disemberment
c. Waiver of Installment due to Death
d. Waiver of Installment due to Permanent and Total Disability
4. All unused health fund accumulates with interest
5. With Return of premiums up to the contract price for non-utilization during the paying period.
6. Covers beyond age 60 with long term care yields *
7. Pre-existing is not covered during Accumulation Period. No exclusion after the 5th year of coverage *
8. Flexible, transferable, ungradable and maybe re-dated benefit design.
9. Reinstatement within 2 years of lapsed policy.
10. Five (5) years or spot-cash payment options.

* Subject to availability of accumulated payment options.


SHORT TERM HEALTHCARE
Traditional HMO

1. Renewal is not guaranteed if with high claims.
2. Yearly increase of premium until age 60
3. Generally, no insurance coverage. Some provide insurance, but very low coverage.
4. No accumulation of unused health fund
5. No return of Premiums (ROP) for non-utilization
6. Covers only up to age 60
7. Pre-existing illness is not covered during the 1st year & lifetime/permanent exclusions may be issued on the 2nd year onwards.
8. Not flexible, non transferable benefit design.
9. Reinstatement is limited only within 30 days of lapsed policy.
10. Continuous yearly payment terms.


Health Care Plan here in the Philippines is licensed under SEC (Securities and Exchange Commission) but unlike Pre-need Plans (KAISER IS NOT A PRE-NEED PLAN) Health Care is regulated solely by a separate commission, the HMO Health Management Organization). HMO is under DOH (Dept. of Health)


This is an example of K-100 Kaiser Plan. Kaiser is a 3 in 1 packaged. One Kaiser Plan includes Health Care Benefits, Insurance and Investment.

Health care Benefits
1. Free Annual Physical Examination in affiliated hospitals
2. Free Cleaning and Tooth Extraction.
3. Member's Choice of Room & Board 600.00 day
4. Annual Benefit Limit of 50,000. - in case the plan holder is hospitalized. Hospital bill will pay by KAiser at 5o,000.00 Limit. Example: Your bill is 60,000. The 50,000 will pay by KAiser, the remaining 10,000 is by the plan holder.


Insurance - at the above example of K-100 plan. Plan holder is insured of Php. 100,000.00, in case of death the beneficiary will received 100,000.00 and upon maturity the benefeciary will receive the Total Health Benefit minus the Long term benefit as an insurance.

Investment - Payment period is 5 years only, after payment period the extended period/investment period of 10 years starts. Upon maturity, after 15 years, in case plan holder is not hospitalized or dead, plan holder will received the Total Health Benefit with Bonus. At maturity of the plan it's the plan holder choise to withdraw all the amount, withdraw half of the amount and left the half to reinvest until his 60 y.o. or 65 y.o. or left the entire amount to invest to receive the annual interest of its invested money when the plan holder is 60 y.o.or 65 y.o already.

Source: IMG