Stark reality about retirement

Many Filipinos dream of a fulfilling retirement, either at age 65 or 60, or even earlier, especially for those who feel they already have the means. Many imagine enjoying a peaceful life by the beach or on a farm, while others think of foreign travels when they retire. The problem, however, is that only a little over half, or 52 percent of Filipinos believe they have enough funds to retire comfortably, placing the Philippines among the countries least likely to have sufficient retirement savings.

This emerged in Canadian insurer Manulife’s 2025 Financial Resilience and Longevity Report, which surveyed more than 9,000 respondents aged 25 years and above across the Philippines, mainland China, Hong Kong, Taiwan, Japan, Singapore, Vietnam, Indonesia, and Malaysia between January and February this year. This finding, according to the company, highlights the big gap between retirement aspirations and financial preparedness not only here but across the region, where the majority of them prioritize independence, health, and a meaningful life instead of preparing well for retirement. “Despite believing that financial well-being can affect health span and lifespan, people aren’t taking sufficient action to prepare,” Manulife noted.

However, lack of financial planning alone does not explain the case of the Philippines. For many Filipinos, it is not about a lack of ideas on preparing for retirement that is keeping them from doing so. A number of factors, many beyond their control, are discouraging and preventing them from planning for their future early.

High medical cost

For instance, salaries in the Philippines, even for the burgeoning middle class, are barely enough to meet a family’s basic expenses for food, clothing and shelter. Add to these the incidental expenses such as utilities, education, and transportation. It is no wonder that the savings rate in the Philippines pales in comparison with its neighbors. The World Bank estimated that savings as a percentage of gross domestic product in the Philippines was 27.34 percent in 2023, or lower than those of Brunei (45.87 percent), Cambodia (38.84 percent), Singapore (38.67 percent), Indonesia (35.87 percent), and Vietnam (34.67 percent).

Also preventing Filipinos from generating savings is the high medical cost in the country. A Philippine Institute for Development Studies report cited last week in this paper noted that hospitals charged an average of P36,130 in 2023, up from P23,852 in 2018. However, PhilHealth reimbursed only P11,000 of this cost. Five years after the passage in 2019 of Republic Act No. 11223, or the Universal Health Care law, to provide Filipinos with equitable access to quality and affordable health-care services, it noted that the government pays for only 44.7 percent of total health expenses.

Social security benefits

The 2024 Asia Care Survey by Manulife, which surveyed 1,050 respondents, also showed that almost 45 percent of health expenditures in the country were paid out of pocket, lamenting how many families, already burdened by inflation, are drowning in out-of-pocket expenses even though 95 million citizens are already enrolled in the national health insurance system.

There is also the problem of the insufficiency of social security benefits. The pension amounts given by the Social Security System for private sector workers and the Government Service Insurance System for public servants are generally not enough to live comfortably upon retirement. In an online investment briefing five years ago, then Bangko Sentral ng Pilipinas Governor Benjamin Diokno noted that an estimated 80 percent of Filipinos close to retirement age were unprepared for the financial costs of living after their retirement from work, pointing out that “eight out of 10 Filipinos aged 60 and above … do not receive sufficient pension to fully cover their living expenses.”

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Cultural expectations

High inflation is also eroding whatever savings Filipinos make. Another concern that emerged from the latest Manulife survey is that 66 percent of Filipino respondents rely on cash and fixed deposits for retirement, rather than alternatives such as pensions, property, or mutual funds. It warned that relying on cash alone could leave them exposed to financial risks.

Then there are the cultural expectations of Filipinos for their families to support them in old age due to the country’s family-oriented culture.

It is true that a major retirement problem in the Philippines is the lack of financial planning. But the reason behind this is more than just poor financial literacy. Low wages, inadequate social security benefits, high medical costs that PhilHealth cannot absorb, and cultural factors all contribute to the difficulty of Filipinos to prepare for a fulfilling retirement. If one has the means, the key is indeed to plan early for retirement if you do not want to live your whole life working. But for the majority of Filipinos, the depressing reality is that a fulfilling retirement will forever be a dream.