Why I want to stay young forever (2)

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I've been tickling my brain about saving up for retirement so I'm putting pen to paper to get a clearer picture of basic concepts that I will have to bear in mind in attempting to map out my route to financial freedom. Whew! Wish me luck. Below is the romanized version of my thoughts. This is the second instalment of the article and if you want to go straight to Part 2, scroll down.

Part 1
I'M THE salaried type and inflation is a cause for concern. Soaring prices of basic goods and services, a trend that doesn't seem to show a steady weakening over time, make it lousy to depend mainly on retirement benefits when it's time for me to hit the rocking chair. Okay, I've to plan. But to be honest, planning has yet to become a permanent addition to my vocabulary. I've got to come to grips with this alien, nonetheless.

Financial advisers talk about identifying first the lifestyle that a person wants upon retirement and this should help me arrive at a ballpark figure of how much I should be able to withdraw every year from my nest egg.

Here's the basic principle according to the gurus of personal finance: If what you want is to lead the same lifestyle (financially, that is) that you have now which costs you, for example, half a million pesos a year, add to that the projected inflation rate for the next two decades or longer, and you have your financial goal for each year of the entire stretch of your life after employment. I've tried crunching numbers and, believe me, it gives me reason to want to stay young forever.

Got to plan now if you still have a quarter of a century before your age makes employers consider you too old. It's a different story of course when you're already a few years before the retirement bell rings. It's pointless to seek advice from professional financial planners when you're about to collect the first tranche of your retirement fund.

Be realistic when you do take the time to plan. Come back to earth when you notice that you're floating in the skies as far as targeting how much money you want for your retirement. Acknowledge whatever amount you can save up every month for long-term investment. Don't be hard on yourself.

Part 2
ONCE you're done setting your target, stick to it for a year maybe. That means months of rejecting your old life of going to clubs, regular movie dates ... If after a while you still have nothing enough to buy T-bills or stock shares for your retirement nest egg, you may have to begin stepping on the accelerator as far as your job promotion is concerned. But that might not be an option for all of us. In the case of Pinoy expats, this may mean taking a second job. Tall order, yeah?

Don't regret you ever took the pains of planning and sticking to your master plan if all this fails after a few years. When you conclude after some time that it's not doable, you can at least make another conclusion: That it's better to enjoy what life has to offer in the here and now and let whatever savings you've got take care of your life as a grumpy old man.

But if it works and when there is enough you have accumulated over time, experts say, you can begin moving up the chain of financial planning and develop foresight.

One more concept: outpacing inflation when planning. This is what many professional financial planners tell us. Which means the money we save up for future use as for retirement must be higher than the speed at which prices of goods and services rise. Whew! But really, all this stuff can be difficult to swallow and could just make you worry. So if you’ve been true to simple goals such as setting aside money in a reputable bank, be happy.

Of course I'm no expert, so seek out certified wealth planners if retirement is visible in your long-term horizon. For my part, my condominium is all I see.

:: THE PICTURE: What's luggage got to do with this page? Uhmm, well, I'm preparing in advance the necessary luggage that will carry all belongings I want to bring with me when I move into my new condo. Tumataas din ang presyo ng maleta, buti nang handa. :)

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