Retirement planning is Filipinos’ top financial goal

FILIPINOS consider saving for retirement as a top financial goal but do not see it as urgent until they are close to reaching old age, according to a study by Sun Life Asia, highlighting the need for improved planning and literacy.

Higher-than-expected living expenses due to elevated inflation are also becoming a bigger concern in retirement planning as retirees have found that their savings may not be enough to cover these costs, it added.

The study titled “Retirement Reimagined: facing the future with confidence” had over 3,500 respondents aged 30 and above in the Philippines, Mainland China, Hong Kong, Indonesia, Malaysia, Singapore, and Vietnam. It said 511 of the respondents were from the Philippines.

“The retirement landscape in Asia is undergoing a profound transformation, driven by increased longevity and shifting societal norms,” David Broom, chief client and distribution officer at Sun Life Asia, said in a statement.

“Our research shows that while independent financial security is seen as the foundation for a rewarding retirement, many people remain unprepared for the realities they face. Early planning and disciplined saving are key to facing your golden years with confidence.”

According to the study, Filipino workers ranked saving for retirement as their top financial goal over the next year, which shows awareness about the importance of being financially secure later in life.

“However, 66% will leave planning around retirement expenses until five years or less before retirement (compared with 59% Asia average), and 13% will not plan for retirement expenses at all. This short horizon will leave many unprepared for the financial realities, potentially delaying their ability to retire comfortably,” Sun Life Asia said.

Most Filipino respondents said they set aside at least 10% of their income for retirement, the insurer said, although 37% said they do not.

“When asked about planned sources of income in retirement, the average expectation was for 20% of income to be drawn from cash savings, representing a potential missed opportunity to maximize retirement income and ensure it keeps pace with inflation,” it said.

INFLATION BITES INTO SAVINGS
“In a warning sign to future generations, 21% of Filipino retirees admitted they had not planned their retirement expenses. This has led to 25% of Filipino retirees being caught off guard by higher-than-expected costs (versus the 20% Asia average), a number that looks only set to grow as inflation continues to bite,” Sun Life Asia added.

Higher-than-expected expenses cited by the respondents were those for general cost of living (77%) and healthcare costs (46%). These have caused 62% to cut spending and 48% to ask their families for more financial support.

Some 42% of Filipino retirees said they regret their past financial decisions, higher than the 23% average in Asia, Sun Life Asia said.

“The number one regret was not saving enough (73%), not investing wisely (47%), and retiring too early (38%),” it said.

“There is a growing awareness among Filipinos about the importance of financial management to achieve a prosperous and comfortable retirement. However, it can be overwhelming for them to begin planning for it,” Sun Life of Canada (Philippines), Inc. Chief Client Experience and Marketing Officer Carla Gonzalez-Chong said. “Financial literacy remains key, so and we are committed to this advocacy so we can help more Filipinos overcome the obstacles and enjoy quality lives in their golden years — just as they deserve.”

Still, the study showed that younger respondents are becoming increasingly aware about the challenges of retirement planning, with current Filipino workers saying they expect to retire at an average age of 65, seven years later than the average age that current retirees exited the workforce (58).

Some 14% of non-retiree respondents in the Philippines said they postponed their retirement plans, close to the 17% average in Asia.

This is above the 5% of retirees who did the same, “reflecting changing economic conditions and personal circumstances.”

“The primary reasons for delayed retirement include the need to save more for retirement (59%), the wish to stay physically and mentally active in old age (59%) and to cover increased living expenses (46%). Younger individuals are more worried by increased living expenses, with 50% of non-retirees citing it as a concern versus 25% of retirees who delayed retirement,” Sun Life Asia said.

“Across all groups in Philippines, the number one aspiration for retirement is spending quality time with family and friends (48%), followed by the prospect of escaping the daily grind of work and relaxing (16%), and global travel (14%). The greatest concerns associated with later years are health issues and physical decline (68%), factors that could put these dreams at risk,” it added.

The insurer said the study highlights that while people are actively saving for retirement, many are not prepared for the financial realities of old age and the impact of inflation on their future expenses.

“To achieve their goals, individuals should consider a comprehensive approach to retirement planning that will provide an income that keeps pace with the rising cost of living and healthcare. By doing so, retirees can better protect their wealth and enjoy a more secure and fulfilling retirement,” it said.

“As Asia stands at the crossroads of demographic change, the message is clear: proactive financial planning is needed to face the future with confidence and live every stage of life to its fullest.” — AMCS