🏖️ How Much Should You Really Save for Retirement?

Retirement feels like a far-off fantasy when you’re just trying to survive rent and bills every month. But here’s the reality: if you don’t start planning for retirement now, future you will pay the price.

You don’t need to be rich to retire well. You just need to start early and consistently.

In today’s edition, we’ll go over:

• Why you need to think about retirement in your 20s and 30s

• How much you should save and the 25x rule

• Where to place your retirement savings

TLDR;

The Bottom Line

• Start early, save consistently – Time is your best asset thanks to compounding.

• Follow the 15% rule – Save at least 15% of your income for retirement through SSS, MP2, and investments.

• Use the 25x Rule – Multiply your annual expenses by 25 to estimate your retirement fund goal.

• Diversify where you save – Combine SSS, Pag-IBIG MP2,  and mutual funds for balance and growth.
  

The content

Why Think About Retirement in Your 20s or 30s?

Because of one magic factor: time.

When you start saving early, your money has decades to grow through compounding. Even small amounts saved monthly in your 20s can outperform large amounts saved in your 40s.

Saving ₱2,000/month at age 25 can become over ₱4M by age 60, assuming a modest 8% return. (we talked about this extensively in our Investing 101 issue)

That’s the power of starting now.

So… How Much Should You Save?

Let’s keep it simple and practical:

✅ General Rule of Thumb: Save at least 15% of your monthly income

That includes:

• Company-mandated retirement contributions (e.g., SSS)

• Voluntary savings (Pag-IBIG MP2, mutual funds, etc)

What is the 25x Rule for Retirement?

The 25x Rule is a simple way to estimate how much money you need to retire comfortably.

🔑 It says: You need 25 times your annual expenses saved up to retire safely.

Why 25x?
Because it’s based on the 4% Rule, a widely accepted guideline that says you can withdraw 4% of your investment portfolio each year—without running out of money—for at least 30 years.

📌 Example:
If you want to spend ₱600,000 a year during retirement (~₱50,000/month), your goal should be:

₱600,000 × 25 = ₱15 million

That may sound huge now, but remember—you have 20-30 years to grow it. The earlier you start, the less you need to save monthly thanks to compounding returns.

💡 Pro tip: Your target lifestyle in retirement affects your 25x number. A simpler lifestyle = smaller fund needed.

Actionable Tips for You

Retirement Myths to Unlearn

1. “I’ll save when I earn more.”
   If you don’t save at ₱25K/month, you won’t magically do it at ₱60K.

2. “SSS is enough.”
   Average SSS pension is ₱4,000–₱6,000/month. Can you live on that?

3. “I’m too young to worry about that.”
   Start now = save less later. Delay = save double later.

🇵🇭 Sample Retirement Saving Plan

Let’s say you’re 28, earning ₱35,000/month. Here’s a sample plan:

Monthly Retirement Savings Goal (15%): ₱5250

You’re done! You’ve hit your 15% using tools available to every Filipino worker.

Where Should You Put Your Retirement Savings?

Short answer: Spread it across safe + growth assets.

Stuff Worth Sharing

The Link Lowdown

• Guide to Retirement Planning for Young, New Professionals - if you want further reading