Don't Be A Burden When You Grow Old

Don't Be A Burden When You Grow Old


By MA. SALVE DUPLITO
Editor

IF you have experienced taking care of your parents who have advanced in age, or know someone that does, you would agree that it's no joke.

Care-giving expenses, medical bills, the cost of adult diapers can stack up and - shoot me for being too realistic - often slowly take away a little of the love children have for their parents, day by day. What remains is the burden of caring for the old ones.

Most Filipinos' idea of retiring and growing old is for their kids to "pay back" their kindness as a parent by taking care of them when they grow old. Do you seriously want to be a dead weight on your children's necks when you are advanced in age?

Say this out loud with me: I will do everything I can so I will never be a burden to my family when I grow old! Careful financial planning, preferably starting the day you got your first job will ensure that your children will love you when you grow old.

Rex Ma. Mendoza, president of Philam Asset Management, Inc., points out in an interview with INQ7money that the steps to make sure that your children will fight over who will take care of you later on are surprisingly easy. They start with a commitment to plan your financial future and discipline.

Financial planning need not be uninteresting. It is only boring when you are talking with a consultant who wants to make it sound complicated so you would continue to get his services.

Financial planning is simply finding out where you stand financially right now, where you want to go, and coming up with a plan to go from here to there! Simple. But remember that it must do at least five things: beat inflation, minimize taxes, manage the unexpected, provide money for special expenses and enrich your retirement.

Beat inflation. There are several holes in everyone's investing buckets. Inflation is one of the biggest. A six percent inflation rate, announced by the National Statistics Office for 2000 for example, means your 1000 pesos in a time deposit account, will buy only 960 pesos worth of goods when you withdraw it next year. Computed until your retirement day, that four percent inflation rate per annum can account for a substantial amount lost from your investment bucket.

So make sure your financial planning strategy will include savings and investment instruments that would beat the inflation.

Minimize taxes . The way things are done at the Bureau of Internal Revenue, only tax lawyers can understand how much your tax expense should be. Opt for tax-free investments to avoid income taxes and tax-deferred investments to postpone these tax bites. That way, your funds can grow at a faster clip.

Manage the unexpected. Health and life insurance are funny products in the sense that you hope never to make a claim. But they are necessary for when things you don't expect do happen – like accidents, or fire, or even death. Listen to your agents with caution and make sure you don't believe marketing hype for high-commission insurance products.

Provide money for special expenses. I know a couple that has done everything in their power to budget their income but failed to set aside money regularly for sudden cash needs, like tuition fees. They end up using their credit card and now struggle to keep up with their monthly dues.

Enrich your retirement. Supplement your Social Security with a clear plan on how you can finance your retirement. With a regular income even after your official working days have ended, visiting with your children and even your grandchildren will be a pleasure, not a pain.

After all is said and done, developing the plan is one thing, sticking to it is another. Once you have created your blueprint, its up to you to make your plan work.