First things first, I am no way ready to retire, nor do I want to, but that doesn't mean that I don't think about retirement and am not preparing for it.
The details are still quite fuzzy when it comes to my ideal retirement, but I do know that when I am retired, I will no longer have to wake up to an alarm clock (except if I have to catch an early morning flight) and will not have to endure reckless drivers and mind-numbing traffic just to get to work.
Retirement planning may seem daunting but you'd be surprised that some of the things you are doing now, or should be doing, are actually paving the way for a picture perfect retirement. Here are the three things that I'm currently doing so that future me can be a happy retiree:
Paying off debt - When I'm retired, I don't want to deal with debt anymore, that's why I'm cleaning up my financial house by channeling most of my efforts and resources towards paying down consumer loans and debts, and then when that is done, I'll shift my gaze towards our condo mortgages. Can you imagine living solely off a pension and then still dealing with debt? I know I can't, so die debts die!
Working on my career- When you do your work and do it well, you become known in your field and will be sought out for your expertise and experience. That means you'll still get to do what you love even after retirement creating another source of income and solving the overwhelming fear of being bored and being a non-contributing member of society that seem to plague most Type A personalities a few years before they are set to retire.
Trying to live within my means- Whether or not you're retired, it is always a wise move to live way below your means and to invest the rest of your income. I'm a government lawyer but the money I bring home is more than enough for us because we paid off the car loan years ago; we bought our condos at pre-selling prices; and we have never developed a taste for luxury. Still, there are months when there just doesn't seem to be enough money to go around, mainly because of debt payment, and so stocks may need to be sold and loans may need to be taken out. However, I look at these merely as temporary fixes and act accordingly to make sure that the future will be less financially vulnerable.
All these thoughts on retirement were triggered by a retirement proposal sent by a schoolmate a few weeks ago. Apparently, aside from her legal practice, she is now also affiliated with AXA and so she introduced me to their Retire Smart product.
Retire Smart is an actively managed retirement fund that automatically recalibrates your investment portfolio as you get nearer to retirement age. This means that when you're younger, your funds are invested in high-return and high risk investments and as you grow older and get closer to your target retirement age, the funds are shifted towards less volatile and more conservative investments.
The idea behind Retire Smart is to have another source of income aside from your pension, that you can regularly draw upon during your golden years, with life insurance thrown in for added protection.
Here's the summary of the plan submitted to me:
Retire Smart is pay to maturity, so if I enroll by next year, I'll have 22 years, or until 2040 (when I turn 60 years old), to fund my retirement account. The annual premium does not change for the whole 22 years since the theory is that as your income grows, the premium payment becomes less burdensome on your finances. The goal is to encourage you to regularly set aside money for retirement.
Take note though that just like any investment, the fund growth rate is not guaranteed and AXA and its fund managers pretty much just promise to do their best in growing and managing your funds. I suggest that if you're interested in Retire Smart to look at the historical performance of Metrobank Trust Banking Group's (AXA's investment arm) funds to see if their fund managers have consistently hit more home runs than struck out.
I like the thought behind Retire Smart since it really is best to have multiple sources of income when we retire, because how many of us work for MNCs with hefty retirement packages? Also, our pensions from SSS and GSIS are sadly not enough to give us a comfortable retirement. That's why this early, we really ought to start being proactive with our future retirement lives to ensure that we don't become a burden to our families and we can zumba and brunch at Cafe Mary Grace all we want with our amigas.
* For more information or questions on Retire Smart or other AXA products, please get in touch with Jasmine Cuizon at email@example.com.
** I am not affiliated with AXA or other insurance companies.
***Additional image from Wells Fargo