Challenges in Retirement and How to Combat Them

Retirement is a time to relax and enjoy the fruits of your labor. But for many Filipinos, it can be a time of great stress. Could you afford to live comfortably if you retired today? Do you have a solid plan in place to cover your medical expenses? What would happen if you suddenly needed long-term care?

These are just some of the retirement challenges that Filipinos face. But don't worry, we're here to help. With a little bit of planning, you can overcome these challenges and enjoy a comfortable retirement. Here's what you need to know.

What are the Challenges of Retirement? 

High costs of living 

One of the biggest challenges Filipino retirees face is the high cost of living. According to World Bank data, the Philippines has one of the highest inflation rates in Southeast Asia. This means that the prices of goods and services are constantly rising, eating into your savings.

To combat this, it's important to have an insured retirement plan that includes inflation adjustments. This way, your savings will keep pace with the rising cost of living, and you won't have to worry about running out of money in retirement. 

Inadequate social security system

Another challenge in retirement Filipinos face is an inadequate social security system. In the Philippines, there is no mandatory pension system in place like there is in other countries. This means that if you don't have private savings or sponsors, you may have to rely on government support in retirement, which may not be enough to cover your needs. 

To avoid this situation, it's important to start saving for retirement as early as possible. The sooner you start putting away money, the more time it has to grow through compound interest.

Lack of access to healthcare 

Healthcare can be very expensive in the Philippines, especially if you don't have health insurance. According to the Philippine National Demographic and Health Survey, private insurance covered just 1.9% of Filipino families or almost 1.9 million Filipinos. The rest rely on PhilHealth and even resort to out-of-pocket expenses for their bills.

One way to overcome this challenge is to buy health insurance in the Philippines before you retire. This way, you'll have coverage in case you need it and won't have to worry about being able to afford treatment. 

Longevity risk 

Longevity risk is the risk of outliving your savings. This is a particularly big challenge in the Philippines, where the average life expectancy is nearly 72 years. To overcome this challenge, it's important to start saving early and to make sure you have a diverse mix of investments that can provide income throughout your retirement years. You may also want to consider purchasing a life insurance policy to help ensure that you have a source of income in retirement.

By understanding these four risks, you can take steps to mitigate them. This will go a long way towards ensuring a comfortable and enjoyable retirement. Of course, no one knows exactly what challenges they'll face in retirement, but by planning and making intelligent investment choices, you can rest assured knowing that you're prepared for whatever comes your way.