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Planning for Your (OFW) Retirement

It’s vital to have a strategy for your retirement, whether you intend to retire abroad or return to the Philippines after you resign. After working abroad, many OFWs return home to the Philippines to spend time with their relatives. You are free to follow suit or choose something different.

Mins to Read: 12 minutes

Age: 21 – 41 years old

Through this article, you will be assisted if you do not know how to prepare for retirement. Here, advice was provided so that you can create a strategy even as you continue to work. This can serve as your road map to ensure you don’t get lost.

Given the enormous sacrifices that overseas Filipino employees make by uprooting their families to work abroad, it is understandable why they are referred to as today’s heroes. Overseas Filipino Workers (OFWs) are prepared to make many sacrifices, including spending extended periods of time away from friends and family, to improve their relatives’ lives back home.

Despite sending billions of dollars home to the Philippines every year, OFWs hardly ever get the opportunity to save and invest their own money because it is used for their family’s food and other essentials.

Whether you have recently begun working abroad or have been doing so for a while, it is never “too early” to start saving for retirement if you are an OFW. Many people who work abroad do so in anticipation of one day returning to be permanently and financially comfortable with their families.

After you leave the working, certain members of your family could still depend on you, or you might not want to put an unnecessary financial burden on your children. You’ll eventually need to use some of your money. By planning and making investments, you may turn these funds into a reliable source of income that will last the rest of your life and leave a lasting legacy.

Why Planning for Your Retirement is Important?

Some people don’t care about their retirement. Resigning from their jobs abroad and going home to their family in the country is all there is. However, having a plan on how to do it does not only help you but your family as well. Here are some considerations if you are wondering about the importance of planning for your retirement.

1. You have a detailed list of tasks to complete.

You’ll be left wondering what to do with your life after retirement. You will have a concrete list of things to do rather than wondering for the rest of your life. This means that if you are going to establish a business, retire in a specific location, take an extended vacation, or travel elsewhere, you will be able to refer to the plan whenever you need it and know exactly what to do.

You can estimate how much money you’ll need to save by planning your retirement early. Your pension or retirement savings will provide you with the funds you need to support yourself in the years following your retirement. Typically, pensions are insufficient to sustain life. This is why many retirees hunt for additional sources of income long after they stop working. When calculating how much you can save, you might consider your pension.

2. Major arrangements can be made following your resignation.

You have time to make effective plans even before you retire, which is another reason why making retirement plans is a bright idea. For instance, you can create your business plans as you prepare for retirement if you want to start one after you retire. You can simultaneously arrange your locations if you intend to go.

3. You can assess your financial capacity.

Finally, retirement planning will enable you to determine if you are yet prepared to retire or not. For instance, you can decide if your present funds will be enough to sustain you after retirement. If your assessment indicates that you require more money, you can postpone planning your retirement until you have amassed sufficient funds.

How Should You Prepare for Retirement?

The planning of your retirement is crucial if you are an OFW. You can’t stay overseas indefinitely, especially if you intend to come home after your work abroad is done. You can use your retirement plan as a roadmap to help determine what to do once you quit your job. Here are some guidelines to keep in mind as you prepare for it.

1. Be sure of your goals for the future before you resign.

Before doing anything else, consider your post-resignation plans. If you intend to travel, list the places you want to see and the people you want to go with. Consider what you want to start if you are considering starting a business. Plan the business piece by piece, considering the capital, location, target market, and goods or services. Consider where your retirement home is located before making a purchase. Please ensure you are particular about whatever you want to undertake.

2. Set up a retirement account.

The next thing to do is to start a retirement fund account. If you have significant plans for when you retire, your pension won’t be enough. There are numerous ways to begin setting money aside for your retirement. You can start a retirement-specific savings account or purchase insurance. Insurance companies will let you pay premiums for roughly ten years, giving you a financial base upon retirement. Your savings are the same. Opening a savings account versus an insurance account is different because your money is growing through investments in the former, but in the latter, it is just in a bank account.

3. Contribute until you reach the amount you are aiming at.

Make monthly contributions once you establish a retirement account. Decide on the monthly payment you’ll have to make. If you start a savings account, you can deposit as little as $500 per month. You can follow something in this manner. This might discipline you so you don’t forget to contribute to your retirement savings account. To purchase insurance, you must adhere to the set monthly premium. The lowest wage is between Php 1,500 and Php 2,000 per month.

4. Withdrawing from your retirement account should wait until you decide to leave your job.

Finally, wait to withdraw money from your retirement account until the day you officially stop working. This is a component of self-discipline. Until you retire, your retirement funds should be kept in a savings or insurance account. To have a successful retirement plan, you shouldn’t use this account for anything other than your retirement.

How Can You Accumulate the Necessary Savings to Feel Secure About the Future?

The following are some of the steps you can take:

Step 1. Decide on your long-term goals.

Think about the chance you might lose your job due to unforeseeable events like a layoff or an unforeseen sickness. Setting specific, attainable goals and using them as a compass to guide your decision-making may help you reach your financial objectives. These goals may have to do with any element of your life, such as your work, business, family, or personal interests.

Knowing your long-term objectives will help you stay motivated and save you from squandering money on temporary joys. Though it is fun to live in the moment, it is equally beneficial to consider your future and the future of your loved ones.

Step 2. Inform your family of your plans.

As you make plans, consult your family. Just because you’re making more money doesn’t mean you should let your family back home waste the money you send them. You must inform your loved ones of your plans so they understand that your decision to leave is driven by factors other than money. They’ll be more sympathetic and understand the situation better, which will benefit you financially.

This could help them relax a little bit and enable them to better prepare for the financial aid you provide. By including them in your plans, you enhance the chance that they will work with you to accomplish your objectives rather than squandering your money.

Step 3. Following your salary, set up a savings account for emergencies or your retirement fund.

It’s only natural to want to shower gifts and experiences on individuals who have helped you to demonstrate your gratitude, especially now that your income has increased significantly. You may send them all your funds without reserving any for yourself. You should still save some of your money even though your primary responsibility as an OFW is to send money home to help your family.

Start saving money for retirement costs right soon if you don’t want to work long hours at a job abroad and come home poor.

If you don’t have an emergency fund separate from your usual savings account, unforeseen expenses like medical bills, job loss, and urgent home repairs could seriously damage your finances. Most experts recommend keeping three to six months’ worth of costs for living set up in an emergency fund. To protect yourself from falling deeper into debt in an emergency, you must maintain a safety net of savings beyond just your regular savings accounts.

Step 4. Get financial stability by making investments.

Learn the tricks to making your money work for you rather than against you so you can safeguard your future and economic aspirations. Financial literacy encompasses the capacity to make wise investment decisions in addition to knowing and implementing basic money management skills and monetary benefits like budgeting and saving. Among other possibilities, you can diversify your portfolio by investing in bonds, equities, mutual funds, index funds, etc.

Another choice for OFWs seeking to invest and profit from passive income is to buy real estate.

There are several ways that real estate could help you in your later years. A house can be purchased, improved, and sold for a profit, or a business space might be purchased and used to establish a new venture.

Possessing real estate is another of the top tactics. Buying a home and paying off your mortgage are great ways to ensure financial security in your later years. If you buy a house now, you might be able to avoid the burden of rising housing expenses and land values. The right home in the right area could be a fantastic investment for accumulating money both now and in the future as a rental or prospective sale.

How Can You Carefully Fund Your Retirement?

1. Begin purchasing mutual funds.

If you don’t have the time to educate yourself on the stock market, an investment fund is a great, straightforward way to start investing.

When managing an investment fund, a knowledgeable fund manager will conduct the necessary stock research, analysis, buying, and selling on your behalf. The strength of an investment fund is heavily dependent on its diversification. Because the fund is often in dozens, sometimes even hundreds, of different stocks, your fund manager minimizes risk to your money while maximizing the opportunity for the fund to make more.

2. Think about investing in real estate.

Real estate is a reliable source of income. If you own one of these buildings, renting out your empty home or condo is a great way to increase your revenue.

Remember that land appreciates with time, primarily if it’s situated in a sought-after, convenient location. So, as your kids grow up and start their own families, you have the option to sell your lot, downsize, and utilize the money from the sale to support your retirement.

3. Utilize your insurance.

Insurance coverage has developed throughout time to offer more than just security in the event of your death or disability. Nowadays, insurance is employed as a source of retirement income. Using a variable universal life (VUL) insurance, as an illustration, you can receive insurance protection and help grow your assets simultaneously.

What You Should Take Into Account Before Retiring?

What should you do ten (10) years before retiring?

While estimating your living expenses, keep track of your current spending. Use this information to predict your retirement income needs and develop a reasonable budget considering inflation.

Make a list of all potential sources of income and use it to calculate your retirement income. Remember that personal savings, workplace retirement plans, and government benefits will all play a role in determining retirement income.

If your company offers a group RRSP or retirement plan, employer fund matching opportunities should be utilized to the fullest extent possible.

What should you do five (5) years before you retire?

Review your investment portfolio and consider switching to safer or more conservative investments.

Reexamine your needs for a comfortable living, and prepare a list of any changes you might make after retiring. Other things to consider include travel, part-time work, medical expenses, and relocating into a new house.

Since you last revised your estimate of living expenses, have things changed? Have your investments performed as expected? Update your planned retirement income.

What should you do with a (1) year left until you retire?

Contact the provider of your employer’s retirement savings plan or your human resources office to determine your eligibility for a corporate pension and your recommended annual income.

Think about estate planning. Look over your powers of attorney, will, and investment and succession arrangements.