Retiring early: Questions to ask
If you didn't need to work, what would you do?
Spend more time with family, reconnect with friends, travel the world, pursue a hobby or sport, and do volunteer work are always the common answers.
Many of us dream of retiring early, especially if we're not happy with our current jobs.
The question is how early is early?
For some, it's 40 or 50. For others, it's any age before 65.
Dindin Santos, a financial expert from Sun Life Financial, says it doesn't matter what age you retire as long as you're ready.
Santos warns retirement must not be confused with leaving your 8-to-5 job, opening a business and becoming self-employed.
Retiring at any age means stopping work completely and enjoying what you have for the years to come.
So are you ready? Here are basic questions you should ask yourself.
1. Can I afford it?
In other words, do you have enough right now to spend for the rest of your life?
Most people would balk at the idea of computing their living expenses for the estimated number of years they'll spend in retirement. But this is very important. You can’t spend half of your retirement package on a European cruise, and then run dry within five years.
Don't think of relying on your children for allowance. They probably have kids to send to school. Or there's a chance, they're also saving up for their own retirement.
Santos advises you to take the time to sit down and assess what you have. It is best to do this with a financial expert or at least someone who knows their way with numbers.
Aside from your savings, are there investments or assets you can liquidate to boost your retirement fund?
Consider what you need to budget for. It’s not just daily expenses. Take into account emergencies like medical needs.
2. Will I get a retirement package?
Before you throw that farewell party, discuss with your HR manager the retirement package your employer provides.
This may be provided under your employment contract, the company's policy manual or a collective bargaining agreement.
In the absence of any of these, the Philippine Labor Code provides that employees who are at least 60 years old and who have worked for at least five years in a company may retire and receive pay equivalent to at least half of their highest monthly salary for every year of service.
Some companies offer bigger retirement benefits so be sure to check with your employer.
Bear in mind that if it's early or optional retirement, you may not be entitled to certain benefits. If this is the case, are you be willing to wait a few more years?
3. Do I still have debts to pay?
If you’re still paying for big-ticket items like a house or a car, you may want to put off retiring for now.
Debt payments will take a chunk of your retirement earnings. You may not be able to comfortably retire if you’re still thinking of bills, credit card dues or amortizations.
Settle your liabilities – all or as much as you can – before you retire.
4. Do I have health and life insurance?
One of the benefits of being employed is getting health coverage free of charge.
But once you leave your company, you’re on your own. In most cases, Santos says it’s possible to convert your existing health coverage into an individual plan. However, most people neglect to do this.
As soon as you hit your 50s, you may already have health concerns. Medical bills will be your top priority.
It's best to get a health plan while you're young and healthy. The chances of getting disapproved for life and health insurance grow as you get older because insurance companies may see you as a big risk with your age.
Take care of your health, stick to your saving and investment plans, and make the most of every experience and opportunity. – Krista Garcia/Rappler.com