Retiring is the time OFWs should prepare for, after years of working overseas, the transition might be hard since they have gotten used to the different culture and lifestyle. They would probably miss their life abroad. They should prepare for the retirement emotionally and physically and financially too!
We all know that being an OFW has an expiration date, especially if you didn’t migrate to the country you’re working for, for example, in the Middle East. Perhaps you never planned to retire abroad since home is where the heart is; you want to spend your retirement with your loved ones in the Philippines and enjoy the fruit of your labor. Here are tips on how you can get ready for retirement as an OFW.
1. Define your retirement objectives
One of the main concerns of OFWs abroad is retiring without a plan, yes there are times that working abroad, makes you want to quit when things are tough from homesickness to a toxic workplace. It would be best to have a vision of what type of retirement you want, especially if you know you’re nearing the age of your late 50s. It doesn’t hurt if, in your early 40’s, you’re already ready for an early retirement.
You should define your retirement lifestyle, including where you wish to live and the activities you intend to participate in during your retirement. For example, You want to retire in a new city in the Philippines, like Cavite or Batangas, because you want to have a perfect balance of provincial life. However, if you want to live in a city since you’re used to the hustle and bustle of the country you’re working for, perhaps you can consider living in Manila or Cebu.
Ask yourself what kind of retirement do you want to have? A peaceful and quiet life in a farm where you have a small business to manage, retire in a city where you can live with your immediate family members? Envision your retirement and you can start from there.
2. Determine your retirement needs
Now is the time to know what you need to make your retirement vision or dreams come true; it’s not enough to daydream about them since you know living as a retiree can be challenging if you don’t have money and you’re not ready.
It would be best to create a future budget that considers the costs of healthcare, housing, and day-to-day life, as well as any potential unexpected expenses. In the Philippines, it can be tough if you don’t have enough money to keep you afloat. Perhaps you need appliances for your small business that are much more affordable to buy abroad than in the Philippines; perhaps you need more extra income?
3. Prepare a financial plan
Having a financial plan if you’re getting to retire is crucial. You cannot live life comfortably as a retiree if you’re not financially ready.
Establish a budget that is both reasonable and attainable, enabling you to save for retirement while still fulfilling your present financial obligations. This is also the time to prioritize your needs and set boundaries if you have to.
4. Have a contingency fund
It would be best to have a contingency fund or an emergency fund since you never know what can happen, it’s also a way to protect yourself in the future. It’s one of the best ways In order to protect your retirement funds from being depleted.
Being an OFW for years must’ve taught you the importance of having money for rainy days, a contingency fund can help you still set some money for your retirement. Since let’s face it, once you retire, it’s not easy to get a job in the Philippines, people won’t easily lend you money, therefore it’s best to be wise about your finances while you can still work abroad.
5. Educate yourself about pension plans
You should become familiar with the pension plans that are offered in the country that you are currently residing in and investigate the qualifying requirements for obtaining benefits. Pension plans are great way to prepare yourself for retirement, since you never know in the future if you will need money to buy medicines or food which are basic needs, having a pension can help you.
There’s plenty of pension plans you can check online, best to ask around in your community or your friends who are also OFW’s on what’s their pension plans. It never hurts to start learning about the benefits of having a pension plan and get started early.
6. Make funds contributions to retirement accounts
SSS and PAGIBIG fund contributions are two of the popular funds to prepare yourself for retirement. Whether you choose to contribute to personal retirement accounts or participate in any employer-sponsored retirement programs, you should do so in order to maximize your savings. It would be best to stay updated in your contribution payments and always check what’s the latest changes and if there’s penalties.
Don’t neglect your fund contributions since it would be hard for you to catch up, especially if you’re near retirement age, which means you will pay a bigger contribution. While your young or early 50’s start being accountable with this, better yet finish the contribution while you’re young.
7. Investments should be expanded
Make smart investments by diversifying your portfolio in order to reduce the amount of risk you take on and to maximize the possibility for profits. One of the main goals is to establish several sources of revenue. You can do this by putting your money into equities, bonds, real estate, or anything else that can give you a continuous stream of income when you retire.
For example, you’ve always dreamed of writing a book, but life keeps getting in the way, you can write a book and publish it during your retirement, and it can add profit. There are many small business ideas you can think about while you’re still abroad. Let your relatives or business partners know if there’s any additional or expansion to accommodate the changes. Perhaps you want to open a cafe in the Philippines, it’s also a great idea!
8. Get rid of your debt
OFW’s should strive to be debt-free before they retire if they wish to reduce the amount of financial stress you experience in your senior years. Every overseas Filipino worker dreams of retiring debt-free.
For a more worry-free and secure retirement, it may be necessary to pay off mortgages, loans, and other financial obligations before reaching retirement age. Make sure you take care of all your financial responsibilities, including helping with their healthcare and education.
A typical goal, even after retirement, is to ensure that their children have access to great healthcare and a decent education, one of the greatest achievement of OFW parents is for their children to graduate and them having a financial plan or jobs by the time they retire. While you’re young, learn by reading financial literacy books to be more wiser about handling personal finances.
9. Think about housing options
For many OFWs, the dream of having a home is important. In order to secure a place to call home in retirement or generate income from rentals, some people intend to put their hard-earned money into real estate in the Philippines or elsewhere. Find out if you’d rather rent or buy a house, and then make a decision about your housing situation that fits in with your retirement goals
. Is the repayment of your mortgage almost complete? Will you be selling your property to finance the purchase of a larger one? Do you want to have an AirBnB business? Perhaps you’ve always dreamed of having a beachfront property and live there as a retiree in Siargao?
10. Remain informed on implications of taxes
Being well-informed about taxes allows retirees to maximize their financial plans. By being knowledgeable of the various tax deductions, exemptions, and credits that are available, OFWs can reduce their tax burden and save more of their retirement income for themselves or to put toward other financial objectives.
Financial planning, staying in line with the law, and making the most of retirement income depend on retirees’ accurate tax information. Armed with this knowledge, overseas Filipino workers (OFWs) are better able to safeguard their financial security, make educated decisions, and understand the intricacies of the tax systems in both their host nation and the Philippines.
11. Get protection from insurance
Guarantee that you have sufficient insurance coverage, which should include health, life, and disability insurance, in order to safeguard yourself against unanticipated occurrences. Insurance provides financial security for unexpected medical costs. The ability to afford medical care in the event of an accident or illness is a crucial financial safeguard for overseas Filipino workers (OFWs) and their families.
In addition, having life insurance is essential for smart financial planning. When an overseas Filipino worker (OFW) passes away, their loved ones will have peace of mind knowing that life insurance will help pay for their funeral, any outstanding debts, and continuing living expenses. This will keep the family from going bankrupt and allow them to keep up a certain standard of living.
Investing in insurance might be a smart move. Variable life insurance is one type of insurance policy that can help you build money. This can help put money aside for the future, which can be useful for things like paying for college, buying a house, or starting a business when you retire.