The Scary Truth about Retirement in the Philippines

Posted by under Guest Posts, Personal Finance . Updated: July 18, 2018

How do you imagine your life 30 to 40 years from now? Do you see yourself quitting your job and enjoying life? Or maybe, you haven’t given it much thought yet because retirement belongs to the distant future, and you have other priorities right now.

Sorry to burst your bubble, but living your old age won’t be as easy as it sounds. In fact, retirement in the Philippines is a bleak prospect compared to our Asian neighbors.

According to a 2015 East Asia retirement survey, 90% or 9 in 10 Filipino workers said they worried about wiping out their savings, being in poor health, and having no one to care for them when they retire.

In short, most Pinoys are not ready for retirement.

Here are the common financial problems of Filipino retirees today that highlight the importance of retirement planning, plus some advice to avoid being caught in such dire situations.

No savings for retirement

Are you saving enough for your retirement? Many young Filipino professionals don’t.

Millennials are very optimistic about their retirement, yet they lack the discipline to prepare for it. In a recent investor sentiment survey, only 7% said they had monthly savings, and 28% said they invested money whenever it’s convenient.

Retirement tips to avoid this situation:

  • Build a diversified portfolio of low-risk and high-risk investments. For millennials, investing in real estate can generate long-term income for retirement. A condo investment in a prime location, in particular, can give regular cashflow income as a rental unit. Stocks and mutual funds are also great investment vehicles for building your retirement fund.
  • Go easy on the YOLO (you only live once) lifestyle. Millennials spend a lot on travel, gadgets, fashion, and night out with friends. Nothing wrong with enjoying your life in your 20s or 30s, but you have to strike a balance between living in the moment and living for the future. Your future self will thank you for it.

Little or no social pensions

If you think pensions can save you from being broke in your old age, think again.

Many senior citizens today are not entitled to government-mandated retirement benefits because they’re not enrolled in either the Social Security System (SSS) or the Government Social Insurance System (GSIS) because of their low income.

In 2016, only 29% of the elderly Filipinos were covered by the SSS or GSIS pension program, according to the Coalition of Services of the Elderly.

Pensioners are not so fortunate, either. As of this writing, monthly SSS pensions range from Php 1,200 to a little over Php 10,000. Although the average is Php 3,600, most retirees receive much lower than that. Even the highest pension in the range isn’t enough to cover one’s monthly living expenses.

As this sad story of a Pinoy retiree shows, social pensions don’t guarantee financial security for retirement.


Retirement tips to avoid this situation:

  • When you retire, treat your SSS or GSIS pension just as an extra income and not your main income source.
  • Find additional sources of retirement income, such as the Personal Equity Retirement Account (PERA). This voluntary savings and investment account allows you to save up to Php 100,000 (or Php 200,000 for OFWs) every year and withdraw your savings when you reach 55. If you start saving in your 20s, you can accumulate about 30 years’ worth of savings.

Health issues and expensive health care costs

Your health will naturally deteriorate as you age, hurting your capability to earn money in your retirement. It doesn’t help that health care costs in the Philippines keep rising.

Even though senior citizens enjoy benefits such as the mandatory PhilHealth coverage and 20% discount on medicines, these are very limited in scope.

Many elderly Filipinos can’t afford expensive medications even if they’re already discounted. Also, the PhilHealth benefits cover only hospitalization costs and are not really useful for outpatient services.

Retirement tips to avoid this situation:

  • Avail of a life insurance plan with benefits for critical illnesses and disability. No matter how much you’ve saved for your retirement, it can easily be exhausted by expensive medical bills if you’re not insured. You can also use your insurance to protect your income in retirement.
  • Quit or at least minimize any unhealthy habits that will take a toll on your health when you get older, such as smoking and drinking alcohol.

Relying on relatives for financial support

This may not be a problem if your children are capable and willing to take care of you in your retirement years. But what if they have their own children to support? Can you bear being a burden to them?

A recent retirement survey that found that more than 70% of elderly Filipinos live with their children and 40% depend on them for financial support.

In the Philippines, where utang na loob is a family tradition, children often become their parents’ investments or retirement plan. A commonly line heard in Pinoy household: “Anak, pagbutihin mo pag-aaral mo, para pagtanda mo, ikaw ang bahala sa amin.”

On the other hand, many Pinoys are still working at an old age—despite their failing health—to provide for their grown-up children whose incomes are insufficient for their own family expenses.

Retirement tips to avoid this situation:

  • Take your retirement planning seriously. Make sure you have enough income-earning avenues that can sustain you in your retirement so that you won’t have to depend on your children.
  • Teach your kids the value of saving money at a young age and train them to become financially independent so that they won’t have to rely on you for financial assistance when they’re old enough to live on their own.

There’s so much to learn about these common Filipino retirement problems.

Nothing can better prepare you for the uncertainties of the future than planning your retirement as early as now while you have much time to build your savings and investments.

Retirement in the Philippines is tough, so you’ve got to act now to ensure a dignified, comfortable life when you retire.

This article was written and submitted by Boom Rizal. She’s an investor, a property consultant, a researcher and a writer. She finds helping other OFW’s in making good decisions when investing in various businesses and/or real estate properties as part of her daily life. She also love to take research in property innovation and writes articles advising readers on how to invest in a property.

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5 Responses to “The Scary Truth about Retirement in the Philippines”

  1. Ayessa Mumar says:

    Sadly, PERA is not yet available in Cebu.

  2. Nice article Fitz. Even when I was much younger (I’m now 42), I was already thinking about my retirement. That’s why I have invested on a few rental condo units near SM Fairview. 😉

  3. George A Washington says:

    Very good comments and article..I will make sure my gf has a condo even if she may not have investment at least she will have a very comfortable home..but food and monthly fees and taxes and gas are real economic issues..once the car is paid off no need to buy another one..buying a condo is good idea after paying it off with a renter then reap the monetary rewards with the rental income..but location location is very important..

  4. Buying rental apartment is the best decision we made out of my ofw husband’s earnings. We made it a priority before any other splurges. Now we reap the reward, it’s paying for our dream house and once paid, it can also help pay for our kids tuition in college.Your blog has helped me a lot in our financial planning. Thank you!

  5. Ting Victoriano says:

    Thank you Fitz for the data and this great article.

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