Retirement may be the last thing on the minds of the young and employed. However, BDO Unibank advises them to start saving for it already to secure a more comfortable post-employment life.

While they will get retirement benefits from their employer and the social security, BDO recommends they augment these by building-up their personal retirement savings and consider the Personal Equity and Retirement Account (PERA).

PERA is a voluntary and long-term retirement savings plan that includes tax incentives in the form of exemptions on earnings from PERA investment products, exemption from estate taxes upon death of contributor, and yearly tax credit certificates amounting to 5% of PERA contributions made in a year.

“Life doesn’t end after retirement. Many are blessed to enjoy 20 or 30 more years. PERA helps you have sufficient funds to enjoy a comfortable retirement lifestyle,” said Marissa Romero, vice president and lead for programmed investments of BDO’s trust and investments group during her guesting on NET25’s morning show Ano Sa Palagay N’yo (ASPN).

Reasons to prepare for retirement early

When asked for the right time to begin retirement planning, Romero said: “When you get your first salary.” She added, “It’s okay to start with a small amount as long as you’re consistent.”

She mentioned that saving early for retirement helps fight inflation and manage risks. “The value of money depreciates over time. Investing early and for the long term allows you to be aggressive with your portfolio and enables your savings to grow.”

When employees retire, they get benefits from their employer in accordance to The New Retirement Law or Republic Act 7641 as well as the government—the Social Security System (SSS) for employees of private companies while the Government Service Insurance System (GSIS) for government workers.

Combined and allocated per month, these benefits amount to about 23% of a retiree’s final salary. “This is where one’s personal savings come in handy. Personal savings fill in the gap and augment these retirement benefits. However, they are not built overnight. Saving early puts time on your side and allows your funds to grow over the years,” Romero said.

BDO, a strong advocate of financial inclusion, is the first financial institution to be accredited as a PERA administrator by the Bangko Sentral ng Pilipinas (BSP) and the Bureau of Internal Revenue (BIR). Interested professionals may inquire about PERA and get in touch with BDO at www.bdo.com.ph/PERA.