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Enjoy Your SSS Pension – P1,200 per month?

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by Bobet Prudente

Note from the author: when first written, minimum pension was ₱1,200.  With an across-the-board increase of ₱1,000 in 2017, all pension amounts were increased accordingly. 

Imagine retiring, and getting a pension of ₱2,200 per month.

If you read the newspapers, you probably remember President P’Noy was in the headlines in early 2016, for vetoing a proposed law raising the pension of SSS retirees by ₱2,000 per month. He said doing so will bankrupt the SSS fund.

It was such a distressing news. SSS could not afford to raise the pension by ₱2,000?

President Duterte thought otherwise.  Under his administration, the SSS implemented a ₱1,000 per month across the board increase in early 2017 for all SSS pensioners and is set to implement a second round in 2019.  But this will reportedly bankrupt SSS by 2026 only eight years from now!

Maximum Contribution for 30 years

I computed how much I’d get as pension when I turn 60. I was a senior manager for more than 30 years, and hence paid the maximum SSS contribution for 30 years. Therefore, I expect the highest possible pension for 30 years contribution.

And the number I got was….. (drum roll please) ….. ₱ 10,900 per month!

What?

How could a highly paid employee, paying maximum contribution for 30 years, survive on ₱10,900 per month when he retires?

But that is NOT the sad part. ₱10,900 is for those who paid maximum. How about those who paid less?

What if you paid for only 10 years?

There are Filipinos who paid less, and contributed for 10 only years.

The minimum pension after paying 10 years is ₱2,200 per month!
Can you imagine living with a pension equivalent to ₱70 PER DAY?

The maximum pension after paying 10 years is ₱7,400 per month.

What if you paid for more years?

If you contributed:

  • for 10 years, your pension will be ₱2,200 – P7,400 per month.
  • for 15 years, your pension will be ₱2,200 – P7,400 per month. (same as 10 years!)
  • for 20 years, your pension will be ₱3,400 – P7,700 per month.
  • for 30 years. your pension will be ₱3,400 – P10,900 per month.
  • for 40 years, your pension will be ₱3,400 – P14,100 per month.
  • for 45 years, your pension will be ₱3,400 – P15,700 per month.
After contributing the maximum SSS premiums for 20 years, you will be eligible to a maximum pension of ₱7,700

After contributing the maximum SSS premiums for 20 years, you will be eligible to a maximum pension of ₱7,700

We must build our own retirement fund!

Obviously, we can’t depend on the government or the SSS to provide us enough during our retirement. We must take control of our future, and build our own retirement fund. Otherwise, we might be among those who will retire with a ₱2,200 pension, or if you contribute the maximum premium for 30 years, ₱10,900 per month.

Do we want to prepare for your retirement?
We must take control of our future, so we will not retire dirt-poor.

Would you like to attend our free 1-hour “Building Your Future – Controlling Your Money” seminar in various locations, to get financial education?

After attending the Building Your Future seminar, you can attend workshops 1 to 4 at the
World Centre for FREE.

The third workshop is particularly interesting if you are planning to build your retirement fund.

Workshop #3. Building Wealth. Asset Accumulation.

  • Wealth Formula.
  • The Hidden Cost of Waiting.
  • The Rule of 72. Understanding Interest.
  • Peso Cost Averaging.
  • Mutual Funds.
  • Passive vs. Active Management.
  • Saving for your Children’s Education.

Plan to retire rich and retire happy!

p.s.
Learn the  “The Secret to Saving and Building Your Future.”  Click here to learn how.

p.s.  #2
Get a  free eBook “The Secret to Saving and Building Your Future.”  Click here to download it.

p.s. # 3
My wife Mary Ann and I conduct the “Building Your Future” financial seminars on Mondays at 2pm and 6pm in Quezon City.  Click here to register for our FREE seminar.

 

How to Spend Your 13th Month Pay

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Merry Christmas!

It’s that time of the year when Filipinos are happiest.  Many are eager to receive their 13th month pay to buy presents for family and friends, and to splurge a little on gadgets.  For some, there are extras, perhaps even a 14th and 15th month pay.

How do I spend my 13th month pay?

How do I spend my 13th month pay?

How do you use it?  I strongly suggest you think a little beyond the holiday season, Christmas presents and merry making.  Why don’t you….

  1. Plan

Close to 70% of people who get large amounts of money go broke within 5 to 7 years.  This is because many people are so unfamiliar with having a large amount of money.  Plan how to use your money, and budget how much you want to spend for Christmas and how much you want to allot for more productive use.A good rule of thumb is 10% for your spiritual community, 20% for your future, and 70% for your expenses and lifestyle:

  • 10% for your eternity
  • 20% for your maturity
  • 70% for your family

And then you plan further.  How do you spend your 70%?

  1. Protect Your Family

Have you considered what would happen if the Lord decides to call you home early?  What would happen to your family?  You can be healthy today, but what if tomorrow, you meet an accident?  Will your family go hungry?Buy SUFFICIENT life insurance coverage.  There are inexpensive options available, such as term life insurance.  P6,000 annual premium at age 25 can buy you P1M coverage.Combined with some mutual fund investments, P3,000 per month for 10 years can  buy P1.2M of life insurance at age 25, slowly growing to more than P4.8M coverage ( or P3.8M cash benefit) by age 60.

Learn about protection, savings and investment in free seminars,  like the SAVING YOUR FUTURE seminars on Practical Money Management from IMG.

  1. Eliminate debt

The typical Filipino makes strange financial decisions.  Most save in banks where their money earns 0.20% per year (that simply means if you put P100,000 in the bank on Jan 1, then by December 31, the bank will give you P200 interest after withholding tax), but borrow from the “friendly Bumbay” at 5-6, or from the “sosyal” credit card company at 3.5% PER MONTH.

Pay your credit card debt. By paying  credit card debt you effectively invest your money at a rate at least equal to the 3.5% they charge you.

Read more about How to Invest by Paying Your Credit Card, and earn an equivalent compounded annual growth rate of approximately 51%

  1. Invest

Investing is increasing the value of your assets using your existing resources, like time and money.  While some consider investing a science, there are enough elements of creativity involved, I prefer to think of it as an art.Investing in your greatest asset – you – is probably your best investment.  You probably invested hundreds of thousands of pesos in your formal education (elementary, high school, college) so you can get a good job, and work for money.

Invest in your financial education, to learn how make money work for you, and to gain financial wealth and spiritual abundance at the same time.  Join the TrulyRichClub.

Start by taking a crash course in stock market investing.Invest in safe investment vehicles to build your retirement fund and your children’s college funds. Equity mutual funds and UITFs are good starting points.

  1. Setup Your Emergency fund

Setup your emergency fund, normally three to six months of your living expenses.  Emergencies are for emergencies or unexpected large expenses such as medical emergencies or temporary unemployment.  Sale in malls are not emergencies, even if your dream shoes are on sale at 70% off.

Keep your emergency funds in savings or time deposits.

  1. Indulge

Spend a little on yourself.  Save specifically on little pleasures for yourself, maybe an occasional vacation or adventure.  Save for your future, but  treat your present self every now and then.

A note on the 10% for Eternity

Share your blessings  to your spiritual community and to the less fortunate.  Remember we are merely managers of of God’s wealth.  Giving actually makes you feel more blessed, and appreciate the abundance of God’s universe.  Giving makes you win in all areas of your life.  In other words, TrulyRich.

Bobet Prudente is a financial coach and Senior Marketing Director at IMG TrulyRichMakers.  He is a member of Bo Sanchez’ TrulyRichClub .  He conducts regular FREE Saving Your Future seminars on Practical Money Management Techniques in Quezon City.

 

Bridging the gap in health care

Kaiser : Bridging the Gap in Healthcare

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by J3 Patino

What is Kaiser?

Kaiser HealthGroup International is the healthcare partner of the International Marketing Group (IMG). It is a lesser known Health Maintenance Organization (HMO) compared primarily because it’s focus is on the individual family clients (and not the corporate accounts). The reason why Kaiser was created was to address the LACK of long-term healthcare provided in the country.

Why Do We Need Long-Term Health Care?

Typically, an average Filipino employee would have a healthcare plan provided by his/her employer. This is certainly very beneficial and helpful to the employee and his dependents, and this covers for the person’s SHORT-TERM healthcare needs.

But what happens when the person has to leave the company? What if he is already forced to retire, or perhaps was made to be redundant? The healthcare benefits will also disappear! I honestly find it quite sad that when people get older, that is the time they will most likely need a healthcare plan, but that is also the time when they won’t have it already.

This is the BIG GAP in healthcare. Everyone has the typical short-term plans, but no one is preparing them for the future – a time when they will no longer be covered by any company, and a time where medical and hospitalization expenses would most likely be in the millions. This is the need that Kaiser is solving, one family at a time.

The Kaiser Short and Long-Term Plan

During the seminar, the Kaiser 4-in-1 plan must have been discussed to you. Depending on the skill on the speaker, there are some things that might not be really clear to you, so let me simplify it.

The Kaiser plan has 3 phases:

Phase 1: The Accumulation or Paying Phase (Year 1-7): For the first 7 years you will be paying for the plan. During this time, it works like a typical HMO wherein you have an annual benefit usable for hospitalization expenses. (There are a couple of bonuses like the Annual APE, and Dental Benefits, but honestly I think these shouldn’t even matter in your decision making).

Comparison to Other Providers: During this phase, the kaiser plan addresses the Short-Term healthcare needs. When compared to other healthcare providers, this plan is actually very sub-par. Short-term healthcare is definitely NOT this plans strong point).

Phase 2: The Growth Phase (Year 7-20): During this phase, you have completed all the payments and all you have to do is WAIT and let the plan mature. At this point your plan will have a starting cash value, that you can also use for medical expenses. The money is invested in government and corporate bonds, which are expected to yield 5-8% per year.

Comparison to Other Providers: During this phase, the Kaiser plan is still there for your short-term needs. The money is still growing at this point and it is at this phase when the Kaiser plan starts to step-up and be more competitive with the other health providers.

Phase 3: The Maturity (Year 20 and beyond): At the plans maturity at year 20, several bonuses will be awarded like the Long-term Care Benefit and Bonus. Plus about 85% of the premiums will be returned to you if you didn’t use the plan during the earlier phases. Here the cash value of your investment would also be good as cash – meaning you can use it for anything, not just hospitalization and medical expenses.

Comparison to Other Providers: At this phase, Kaiser stands out because most healthcare providers are already TOO expensive (Try this: add 20 years to your age now, and inquire how much a healthplan will cost….) Meanwhile, your money with Kaiser has already accumulated (and depending on the plan you chose, your Total Health Benefits would be upwards of P500,000 all the way to several millions).

All in all, I think the Kaiser plan is a great compliment for those who have existing healthcare plans (especially if its provided by your employer). This way you’re covered for both your short and long-term needs.

Where the Kaiser Plan Fits

As you learned in the seminar, there are 6 steps to financial freedom.

  1. Increase Cashflow (by increasing income and decreasing expenses)
  2. Manage Debt (by debt consolidation and eliminating it)
  3. Create Emergency Fund (Save 3 to 6 months of your expenses)
  4. Ensure Proper Protection (Portect for medical emergencies, and risks)
  5. Build Long-Term Savings (through investments)
  6. Preserve Estate (through estate planning)

Where does Kaiser Fit into the Picture?

Kaiser is in the 3rd and 4th step of achieving financial freedom. While investing in the stock market is at the 5th step already. And to build a solid financial foundation, these steps must be STRICTLY FOLLOWED.

(Imagine a child asking for dessert BEFORE even eating the main course and the vegetables. Would you, as a responsible parent, actually do this even if the child wants it so badly? Of course not! That would be very unhealthy, and it would ruin the whole point of eating (which is to make us healthier).

It’s the same thing in building a solid financial foundation. No matter, how good investing may make you feel, if not done with the right foundation it is also unhealthy. The right way is to Have a source of income first, THEN make sure you don’t have any high interest debts… THEN save and secure yourself with insurance and healthcare, THEN that’s the only time you invest.

Should You Get the Kaiser Plan?

Affiliate Disclaimer: I (along with your IMG financial coaches) will receive a commission should you decide to purchase a Kaiser plan through us. But as an independent and Registered Financial Planner, I will only recommend the plan if it suits your needs.

So let me start off with who should NOT get the plan..

PLEASE DO NOT get the plan IF:

  • You have no source of income.
    The unemployed, children and students are a big-no no. Retirees can get the plan only if someone else will cover for it, and you have savings that will last you at least 3 years.
  • You are buried in high-interest debts.
    If you cannot fully pay your credit cards, then please repay them first. Auto and Home Loans are okay since these are more acceptable interest rates.
  • You cannot save more than 10% of your salary.
    Focus on increasing your income and decreasing your expenses first. Learn how to budget and save first. Learn how to increase your income before moving on to the higher stages.

If you belong to any of the above, you can still come to IMG for coaching, but it is really not recommended that you get the health plan. Put the first things, first.

If you DO NOT belong to any of the above, then you can consider getting the plan. For this, I will simply rank it if it’s excellent, very good or good for you to get a plan:

The plan is EXCELLENT for you IF:

  • You are a young professional and you are already covered by your employers health benefits.
    This is a perfect compliment to your short and long-term healthcare needs. This is actually also very good because if you do not use the Kaiser plan in the early phases, you get the 85% return on your premium. So you current plan acts like a BUFFER to your Kaiser plan.
  • You are self-employed with no form of health/medical benefits.
    The bonuses are really valuable here like the insurance, APE, and of course the health plan. It being a 4-in-1 (savings, insurance, short and long-term healthcare) is also very convenient for your complicated and busy lifestyle.
  • You are an employee planning to transition into business.
    One of the fears that employees cling on to are the ‘benefits’ in the company. This almost always prevents them to take the leap of doing what they truly want to do. When you have your healthcare covered, at least you’ll have a safe foundation as you venture into the unknown.

The plan is VERY GOOD for you IF:

  • You are an established family man/woman in your 40’s to 55’s.
    Given that the plan takes 20 years to mature, it would just be in time for your retirement years.
  • You plan to grow old SINGLE.
    Not to assume anything about your future, but generally you will have less people to rely on in your old age. (Both socially, and financially). Having to hiring a personal caregiver is also very possible so it would be good to prepare as early as now.

The plan is GOOD for you IF:

  • You are starting or building a family.
    Healthcare is always a good thing, but the challenge in your case is the very tight budget. In this case, I would actually recommend you to focus on getting life insurance first, and really saving up for the emergency fund prior to getting additional healthcare. I would also recommend that you start saving for your child’s college tuition already if you have excess money. So invest in this Kaiser plan only when you can really afford it, and all the other necessary steps are already covered.

If you did not belong to any group above, sorry for missing out on you. But I believe with these examples, you already know the befits of the Kaiser plan.

Abouit J3 Patino

This review was written by J3 Patino – the founder of Pinoy Money Academy and an independent Registered Financial Planner. J3 helps Filipinos understand investments and other financial instruments so that they can make the right investment decisions and achieve their financial goals.

 

7 Ways to Upgrade Your Financial Life!

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By Laurent Dionisio

Let me give you to seven ways  to upgrade your financial life.

Tip 1 – Be Financially Literate

Financial education is key to prosperity.  Learn practical tips on money management, debt-management, saving and investing by continuously educating yourself.  The Internet is a rich resource for self-improvement.  You can also attend  a FREE Financial Planning and Coaching Seminar to help you get started and to create your personal financial plan/blueprint.

Tip 2 – Minimize or Eliminate Debts

“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” –Ogden Nash

If you can, try not to get consumer loans or accumulate debts for non-essentials, like vacations, gadgets and flashy appliances.  It is a burden both for your financial and personal life. It imposes you some hefty cost of capital or interest which is a burden for you. Use the power of compound interest in your favor and not the other way around.

Do you have Credit card loans? Home loans? Car loans? Rule of thumb is make sure that your total amortization is within the 30% threshold of your total income.

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Tip 3 – Develop Debt Elimination Plan

Given that you have current debts and loans, you must develop a plan how to eliminate them. There are actually ways to eliminate debts but the two basic strategies I know is by eliminating them by interest rates or outstanding balance. For the former procedure, list down your debts per interest rates from highest to smallest, then put your extra cash on the first loan with the highest interest rate first after after paying the minimum for all of the loans, thus, prioritizing to eliminate the loans with the higher interest rates while building momentum.

Same procedure with the latter method of elimination, you just prioritize according to loan outstanding balance. Do not forget to celebrate small wins!

Tip 4 – Make your Own Budget Plan

In your income statement, you can construct your own budget plan. Get your average yearly and monthly income and your corresponding expenses. Classify your expenses from dispensable and indispensable or some would classify it as needs or wants. Dispensable expenses are charges that sometimes are just wants like dining out, cable and internet fees, movies or travel expenses.

On the other hand, indispensable expenses are those expenditures that we cannot live without like food allowances and water/electricity dues. Of course, classifications are unique for each of us depending in our lifestyle and judgment.

Shall we make a budget? I think we should. Its vital role is to control our cash inflows and outflows. It also gives us some sense of control over our financial life. Moreover, it will also make us aware and responsible on our expenses and income especially those that are dispensable.  It is basically an overview of our financial standing.

Tip 5 – Improve your Budget Plan

After laying down your current budget, you now have the whole picture of your cash flows. You may now tweak some of it and get your desired savings or expenses ratio. You need to see your expenses for you to check the leaks that drain your financial bucket. You need to put some stop on it before it is too late. On the other hand, you can also see if you are saving enough for your financial goals.

Do you allocate more for your entertainment expenses likes for movies, dining in a restaurant or your travel expenses? This could be hard but changing some of your bad spending habits could really benefit your financial standing in the long run.

Tip 6 – Make your Own Financial Statements

It is very important to know your financial standing. For you to achieve your financial goals, you need to know where you stand now, financially. Knowing where you will start will help you lay down your financial plans and strategies. Personally, I created my balance sheet, income and cash flow statement. I update them monthly so that I can track if I am making a progress or not. Then I assess if should I adjust my financial strategies and plans.

Do I have enough liquid assets to cover my current debts (Current ratio)? Are my assets mostly funded by debts or equity (Debt to equity ratio)? Do I have unnecessary expenses that I can eliminate to increase income? What is percentage of discretionary expenses to my total expenses?  What percentage of amortization expense compared to my total income?

These are some of the vital information you need to know your financial status and health. So I advise that you make time to prepare your own financial statements so that you will have a blueprint of your current financial standing.

Tip 7 – Start Saving and Investing

When you follow the given steps above, I am sure that your will finances will improve and eventually create excess cash. So the best thing to do is not to spend it again but rather save and invest and make your money work you instead working your ass off just to pay all of your debts.

How? Start to live simply, increase your income, learn and invest in yourself and start saving and invest your money. Believe me, when you start saving or investing, you will have this sense of pride and accomplishment.

But remember, financial education is key to prosperity.  You can attend  a FREE Financial Planning and Coaching Seminar to start your journey to financial freedom.

Congratulations! You are on your way towards your financial goals!

Good luck!

Laurent Dionisio, CPA, RFP©

Laurent Dionisio is Owner & Publisher of PinoyFinancialPlanning.com, A Certified Public Accountant, a Registered Financial Planner, currently taking up Master in Business Administration, and the continuing professional experience and education through attending seminars, conferences and reading books and everything about finance make him knowledgeable and competent in this field.