When you’re in your twenties, retirement seems an awfully long way away. That’s probably why most millennials believe they’ll have a better lifestyle by the time they retire. But it’s hard to see how they’ll make it happen when they don’t take investing very seriously.
Manulife’s Investor Sentiment Index (MISI) is a regional survey that measures their clients’ attitudes toward financial planning. Their respondents include middle class and affluent people from Cebu and Manila who are over 25 years old. Among those who are under 35 years old, 63% believe they’re on track or even ahead of schedule when it comes to meeting their financial goals. Consequently, 68% believe they can improve their standard of living by the time they retire. Those who aren’t on track believe that they can catch up—after all, they have all the time in the world, don’t they?
At the same time, however, a good number of millennials foresee themselves shouldering financial burdens and health problems in their old age. 74% predict that their health will deteriorate as they age, and 51% believe they won’t be well enough to work by the time they reach retirement. With the age of retirement currently set at 60 years old, we wonder just what these people are eating.
Since caring for the aged is a big part of our culture, 63% of millennials believe that when they retire, they’ll be supporting their parents as well as themselves. 42% don’t expect the same kind of assistance from their children, and 58% see themselves still supporting their children in their old age. On top of that, 49% see themselves paying debts or mortgages during their retirement, and 36% even believe that they’ll run out of money at some point.
“While it’s great that many investors in the Philippines are thinking seriously about their retirement, their optimistic expectations may not accurately reflect the challenges ahead,” says Aira Gaspar, Manulife Philippines Chief Investment Officer. “Investors must be diligent about retirement investment planning given the financial and health challenges of increasing life expectancy. Millennials in particular should invest early and often.”
The reality is that even while investors worry about facing financial problems during their retirement, only 39% opt to get into stocks and bonds which, as the MISI statement explains, “can offer greater returns than savings accounts or working overtime.” On top of that, just 7% of the survey respondents have a regular monthly investment plan. Others invest a lump sump once a year or every few years, and a good 28% do so randomly, whenever they feel like it.
Ryan Charland, President and CEO of Manulife Philippines, says, “A savvy investor plans for the long-term and this is especially true for retirement. Developing an investment plan early and reviewing it often will help prevent disappointment later in life. We all know about seeds; the sooner you plant them, the bigger the tree. It’s the same with investing for a decent retirement.”
Given this, you should probably add an investment plan to your list of New Year’s resolutions for 2018.