How much do you need to retire comfortably

When talking about retirement planning, we’re often faced with the question, “How much money do I need to retire comfortably?” Depending on where you look, a good retirement fund can range from half a million pesos to several millions of pesos – but how accurate are these figures?

It’s important to note that everyone is different, so what would work for one person may or may not work for you. That’s why financial experts all recommend making as accurate an assumption as possible: Having a retirement fund estimate that is too low places you at higher risk of a struggle later on, but assuming a too-high retirement may place a lot of stress on your shoulders.

Knowing how much you truly need helps make everything easier, as you can budget better and make the right investment for your financial goals.

One of the best ways to determine your retirement needs is to assume that you will need 70 to 80 percent of your pre-retirement income to maintain your standard of living when you’re retired.

Let’s create a scenario. If your annual income is PHP 600,000 (which means that you’re earning PHP 50,000 per month), then you would need a yearly retirement income of PHP 420,000 to PHP 480,000 (or PHP 35,000 to PHP 40,000 per month).

Another method is the “Rule of 25” where you multiply your annual retirement income needs by 25. Using the same scenario above, if you would need PHP 600,000 per year to maintain your quality of life, you should accumulate a retirement fund of PHP 15 million (PHP 600,000 x 25).

While these methods give you a good ballpark figure, they are still estimates that don’t consider your individual needs. We discuss more accurate ways to calculate your retirement fund in our e-book.