My Early Retirement Number
Like any typical government employee, I'm relying on my pension from GSIS to tide me over during my sunset years. Unlike the ridiculously low pension being offered by SSS to its retiree-pensioners, with the highest pension being Php18,945 (!!), retired government employees can get up to 90% of their average monthly compensation as their pension. At present, there's a comfortable gap between my income and our expenses, so if we just keep this lifestyle, 90% of my current income will be more than enough for our upkeep when it's time for me to retire. This is why I haven't really given much thought to proactively saving and investing for my retirement.
But, if the recent Philhealth fiasco has taught me anything, it's that our government institutions are not as rock-solid as I thought they were and are very susceptible to mismanagement. Thus, I shouldn't pin all my hopes at a comfortable retirement solely on GSIS because 24 years is still a long way away and who knows what will happen by then.
If I were to resign from my job right this very moment, I will need a monthly income of Php80,000.00 or Php960,000.00 per year to cover our basic household expenses, mortgage, the kids' education (including therapy), and insurance premium payments.* This number can also include 1-2 domestic travels per year, but only if we stay with relatives and don't spend a lot.
My FI number, or financial independence number, will most likely go down a bit next year once I finish paying off one insurance premium, but it won't be a lot, so let's keep it at Php80,000.00 to make it a round and even number.
Right now, my sources of passive income are:
a) Yearly dividends from two cooperatives
b) Cash dividends from stocks
c) Advertisement income from this blog
Last year, the two cooperatives I'm part of gave 12% and 8%** dividend to its members. Before the pandemic happened, members to one of the cooperatives could deposit up to Php7,000 per month, now it's only Php2,000, while the other cooperative has a Php3,000 deposit cap per month. With regular monthly deposits year on year, you can just imagine how quickly the savings in those cooperatives can pile up.
Legend has it that there used to be no deposit cap with the cooperatives, so some court employees with dual income households would deposit all their monthly income in the cooperatives, and at the end of the year, they would use their dividends to buy a car or pay for a condo downpayment.
Sadly, those days are long gone. Nonetheless, it still holds true that the longer you contribute to the cooperatives, the bigger your dividends will be. I've been with the Court for more than 4 years so my dividends have become quite sizable through the years. However, it's still nowhere near my early retirement number.
I also regularly receive cash or stock dividends from the individual stocks I hold, but since my portfolio stagnated for years and I only recently revived it, my dividends from my stocks are a pittance. I think I only received about Php5,000 in cash dividends in the last 2 years. That's how small my portfolio was.
A third source of passive income is the advertisement income generated from this blog. I signed up with Google Ads so I get a tiny amount every time someone clicks on the ads on my blog. But I've come to accept that my readers just don't click ads (as seen by last month's paltry Google ads revenue of only US$3.50) so I have to find more ways to better monetize this blog.
It's clear that I can't afford to retire any time soon (unless my husband has a manuscript hidden somewhere which will become the next Harry Potter), so in the meantime, I plan to do the following to build up my passive income:
- Continue saving money with the Court cooperatives;
- Buy more stocks that issue cash dividends. I used this month's stocks budget to buy my first batch of DMCI (DMC) stocks which gave out 10.81% in dividends last year;
- Set up a PAG-IBIG MP2 account; and
- Be more intentional with monetizing this blog - which means reading up on SEO, researching on other ad placement companies aside from Google Ads, and fixing my blog to make it more attractive to collaborations with established brands. I actually had a nice working relationship with big brands when I ran a beauty blog in my past life, so let's see if I can replicate that this time around.
In closing, I fully recognize how lucky I am to be in a job that allows me to support my family without sacrificing my beliefs and integrity. Which is why I can afford to exert merely a token effort at creating passive income, because I truly like where I am right now and am in no hurry to leave. But again, having enough passive income creates options and opportunities where there were none before and might even embolden you to carve out those options and opportunities for yourself. So to all my fellow government employees, let's not rely on GSIS to support us in our golden years. Instead, let it merely be the add-on to the golden years that you've created for yourself. Never leave your destiny in someone else's hands.
* I am the principal breadwinner in our household. My husband's share of the household expenses primarily goes towards subsidizing groceries, car repair and maintenance, and other bits and bobs.
** I only became a member of the second cooperative this year, but I remember someone saying that it issued 8% dividends last year.
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