Mission Possible: Retirement

Image source: Pivot Point Advisors

Yes, it is possible not just to retire per se but, much more, to retire comfortably!

That’s what Randell Tiongson, finance coach and author of “No Nonsense Personal Finance: A Step By Step Guide,” made me believe during last Saturday’s seminar.* 

Allow me to share a personal story. My father was a lowly bill collector. He was also the thriftiest guy I met in my life. (One night, his motorcycle broke down. So, he left it in a store at 10th Avenue, Caloocan City. At that time, we lived at 1st Avenue. The next day, we walked from our house to that store instead of riding a jeepney to fix his motorcycle. That’s 10 blocks away! He also taught me the value of hard work. He “volunteered” me to wash my uncle’s jeepneys. That provided for my allowance during college.) 

My father, the late Efren Cortez, and my mother, Mely.

When he died a few years shy from his retirement, he had no debts. Other than the funeral benefits from the Social Security System and his retirement fund, we found out that he even left money in the bank for my mother. It’s not sizable but he made sure my mother wouldn’t be a burden to us. 

I still give a small amount of money to my mother time and again but, thankfully, I am not part of a “sandwich generation”** because my father prepared for his retirement, though he did not get to enjoy it.

"As the children provide for their parents, they also provide for their own children at the same time." That's how Randell Tiongson defined what a "sandwich generation" is.
Image source: http://womenmisbehavin.com/

I owe it to my children to do the same. I don’t want to leave behind debts. If I’m the first to go, I don’t want my wife to become a burden to my children. I want my children to enjoy what I enjoyed from my father: a “no sandwich generation” legacy. I even want to leave a small inheritance for them. One statement Tiongson made hit me hard. “Even if I would no longer be with my family physically, I could still be with them financially.” 

During the seminar, I realized that the best time to prepare for retirement was yesterday. But the next best time to prepare is now.

However, five years are too short a period of time to prepare for investment. According to Tiongson, “Time is your greatest asset. Make the most of it. For a 20-year retirement, start planning 20 years before retirement age.” Time could work for us or against us depending on whether we start early or we start late. Actually, we can never start too early. The earlier we prepare for retirement, the better. But, we can start too late. 

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Yet, instead of ruing the lost opportunity, as I have said, the next best time to prepare for retirement is now. We can still go through Tiongson’s five-step process. First, improve cash flow. My wife and I are now taking an inventory of assets that we could sell. Second, get out of debt. We are also assessing our progress as far as getting out of debt is concerned. Third, set up emergency fund. Once we pay off our obligations, we will start saving up for that. Fourth, get protected from life’s risks. I’m already insured. So, I tick that off my list. Lastly, invest for the future. After making sure I plugged the leaks regarding the money coming in and the money coming out, I need to look into some possible investments. 

Tiongson clarified, “There’s no such thing as ‘the best investment.’” One must factor in the economic cycle. For example, “Buying stocks are good when the economy is growing.” He also reminded us that a high return of investment equals high risk while a low return of investment equals low risk. It really depends on our risk tolerance. Whatever investment, what’s important is that I start with whatever I can invest. 

Image source: AIChE

One thing is sure. Either we catch up or we cut our losses. But we need to start now.

My take? To retire comfortably is not mission impossible.

* Thanks, Randell Tiongson and Luis Magalong of Whiteboard, for the free tickets to the “No Nonsense Personal Finance” seminar.

** “As the children provide for their parents, they also provide for their own children at the same time. … This sandwich generation will not have enough set aside for their golden years, and they themselves will be taken [cared] of by their grown children thereby participating in an endless and vicious cycle we now call as Filipino Financial Planning.” (From page 6 of Tiongson’s “No Nonsense Personal Finance.” To know more, read my previous blog post, “Money, Money, Money.”)