The myth
If you rely on a monthly income, you’ll already be familiar with a big part of your salary going to taxes and mandatory contributions.
In return, your health or retirement needs will be partially covered by the money you worked hard for.
Knowing how much money is deducted from paychecks, some people believe these contributions are enough to support day-to-day living once they retire.
The reality
If you’re a private sector worker, you’re likely covered by the Social Security System (SSS). You’ll receive retirement benefits if you have at least 120 monthly contributions upon retirement at 60 or 65 years old.
Under certain conditions, you may also qualify for retirement pay from your company.
Public sector employees are covered by the Government Service Insurance System (GSIS) if they have completed at least 15 years of government service and are at least 60 years old when they retire.
The average SSS pensioner receives P5,123 monthly, according to a 2017 report from the Philippine Statistics Authority (PSA). For GSIS, the average monthly pension is at P12,560 as of 2019.
If qualified, your government-mandated retirement benefits generally depend on your paid contributions, salary, retirement age, and years of service. You can estimate your potential pay through online pension calculators.
Keep in mind that the actual amount may differ depending on the number of your contributions.
If you have incomplete contributions, you may receive lower benefits or even fail to qualify for them. Any unpaid loans will also be deducted from your benefits.
Once you know your expected amount, think about your expected life after you retire. Will it include frequent travels or vacations? Do you have plans of putting up a business or buying a retirement home?
You should also consider childcare, medical bills, and other huge expenses that can come up when you enter your golden years. Add up all costs to know if you can shoulder them with a monthly pension alone.
The verdict: It depends.
If all goes well and the cost of living isn’t that high, then a monthly pension might be enough for a frugal, simple life. Travel and other luxuries might be out of reach if you rely solely on the government benefits to support your lifestyle.
Even if you stick to the barest essentials, old age can still expose you to a higher risk of illness and costly medical issues. It’s a good idea to have a backup plan and do everything you can to prepare for life after retirement.
Some ways you can prepare today is by investing your money, having alternative sources of income, or starting a voluntary savings account to supplement your government benefits.
