Have you thought about your retirement?

I was out of the office early today. So I had find the time to stroll (if that is what you call it). I went to an ukay-ukay store across the Immaculate Conception Cathedral Parish in Pasig.

Just looked around and went straight to the Merriam Bookstore to buy receipts. I decided to walk (the extra mile) from the church to Pasig Palengke. Palengke means market place. I was sitted all day at the office so I decided to do some walking exercise.

On my walk, I passed by two old men. Both on their late 50's; cigarette vendors seated and resting on the sidewalks when you passed by Immaculada School. They were poorly dressed and dirty brought by the long day of standing on the streets trying to sell their goods. I also passed by an old lady. She was playing solitaire. She is also on the sidewalks and I think after she played cards, she will rest her back on the cold streets on the same post she is when I saw her. I can't help but feel sorry for them. At some point, I thought, "Don't they have families who can take care of them and give them decent living?" It also made me asked myself..where will I be when I get old?

I know that it is still too early to think about retirement at my (young) age of 28. But if not now, when should I think about retirement? When I reach the age of 50? 59? If you were to asked me, I do not want to reach the age of 50 and I am still working. We always correlate retirement with old age, back pains, Pensions - just to name a few. But that is not my idea of retirement. Wouldn't it be nice if we retire young? Like the age of 40?

You always reap what you sow - that is how life rewards as. Same is true for retirement. What you do today towards the age of your desired retirement, determines the kind of retirement you will receive. I personally do not recommend that you depend on your pension. It can be a great benefit for you for the years of service you put on your employment, but do you think that would be enough to sustain you and your living expenses? By living expenses I mean - your food allowance, clothing, bills payments, etc. If you live modestly, it may suffice. But our goal is not to be sufficient..but to retire abundantly. So, how do we do that?

Here are my 7 recommendations on what should be done to have your "dream" retirement:

1. Save. This means allotting a certain portion of your salary to savings. Most of us know savings as: Salary - Expense = Savings. This formula is wrong. The correct formula for savings should be: SALARY - SAVINGS = EXPENSE. You should always start with your savings. Because the tendency is when you follow the first formula, your savings tends to become your last priority. Also, keep in mind that you cannot, as in strictly, do not use or spend your savings. Allot 10% of your salary to savings.

2. Live modestly. I think this is self explanatory. Live by your means. Do not cross over your budget. Most people do that. They spend more than what they can afford. So what happens is, they borrow money or pay in credit card terms which lead them to an unending vicious cycle of debt - debt that they do not realize consumes them without them realizing it.

3. Spend wisely. Most people fall into debt because one, they either buy things that they do not need (luxury) or they spend too much. Prioritize!

4. Get insured. Insurance will become your expense but it is for a greater cause. You would want to protect your investments. By insuring yourself, you are giving your family the protection that they need just in case you pass from this world unexpectedly.

5. Get financial literacy. Educate yourself. Know the secrets why the rich gets richer and the poor gets poorer. Read. Research and learn. Learn about how you can make "money work for you" instead of "you working for money".

6. Create passive income. Invest. Once you get the facts and theories through financial literacy education, apply them in real life. For people in their 20's and 30's should realize that employment is a great tool to build your investment but not a surety when it comes to retirement. One great way to invest is through the stock market. I personally recommend this site: www.citiseconline.com.ph. They have simplified stock market investing and made it more "maka-masa". Do check their site for further details.

7. Pay your debts ASAP - as soon as possible. If you have debts, then you should pay them accordingly to avoid recurring interest or more charges. Once you fully paid your debts, you have more money to invest - more money working for you.

In conclusion, it doesn't matter how much you are earning now. What matters is how well you handled your money to secure yourself to retirement. If you don't set your goals and priorities, you may end up in the streets, an old man or lady..so think about it now or regret it later. Smile and be like the couple on the picture above - no worries, relax, happy - the way retirement should be.

Photo source: http://www.flickr.com/photos/72825507@N00/3098343893