On a recent radio talk show, I was asked if retiring early should be a goal for people.

READ: Are we there yet?

I must admit that retiring early is everyone’s dream, not just of Gens Z and Alpha. It is said that when a person is capable of retiring early, he can:

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* spend more years, while he is still young and healthy enough to enjoy doing what he enjoys like traveling, hobbies, volunteering, or just relaxing.

* avoid the physical or mental drain from a job. Retiring early can reduce stress, improve sleep patterns and give more time for exercising, eating healthy meals and focusing on medical care.

* avoid being tied down to an 8-to-5 job and asking for a leave, thereby setting his own daily pace.

* shift to more creative projects, business ventures or a cause. Thus, retiring early does not mean stopping to work altogether.

* avoid burnout from highly demanding jobs.

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* spend more time with the family like with children and aging parents, thus, having a more meaningful presence during those important years.

Fueling the above is the Financial Independence, Retire Early or FIRE movement that has popularized aggressive saving and investing to afford retirement as early as possible.

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Admittedly, retiring early just to avoid the long commute to and from work, which can last from two to four hours each day, is already a major advantage.

But let us look at the math.

Normal retirement age

Consider a 22 year old with an initial gross monthly salary of P22,000 on 13 months of pay per annum growing by 5 percent p.a. compounded and with inflation at 3 percent p.a. compounded. Let us also assume that what he wants to spend per year in retirement if he were to retire today is equal to his annual gross pay of P286,000.

Let us assume further that this person will get married and that his future spouse will have the same age, income, income growth and retirement spending assumptions. Both want to retire at age 45.

Let us finally assume that both will live up to the age of 75 and that they will want to invest in Philippines stocks, the composite index return for which amounts to 7 percent p.a. net compounded.

Only when the couple reach the age of 50 will they tone down the risk-taking by investing in fixed rate treasury notes or FxTNs at 4.5 percent p.a. net compounded.

Using the My PF App, it can readily be shown that the total future value of retirement cost for the couple will amount to P53,707,482 and that they will be required to save 55.21 percent of their respective incomes until age 45, a savings rate that will only increase their stress levels.

If the couple wanted to retire at 55, their required savings rate goes down to a more manageable 24.96 percent p.a. up to that age. And if they wanted to retire at 60 and file their lump sum and monthly pension benefits with the SSS, and get their lump sum retirement pay from their respective employers, they need to only save 3.56 percent p.a. up to that age.

The numbers show that retiring under the normal retirement age will be the least stressful. And a big part of that is due to the much lower total future retirement cost of the couple (that is, P32,711,326), given their shortened retirement period.

The low savings rate for retirement will also allow the couple to enjoy some of the finer things in life like vacation travel, a nice home and good schools for their children.

Noble work

So, my advice is to not take your job too seriously. Work is good because it keeps our mind sharp. If it is noble work, then be proud of it. But if it pounds you to the ground then go look for another.

Again, long for your destiny, savor the journey and enjoy the company.

Send questions via “Ask a Friend, Ask Efren” free service at www.personalfinance.ph, SMS, Viber, Twitter, LinkedIn, WhatsApp, Instagram, and Facebook. Efren Ll. Cruz is a Registered Financial Planner and Director of RFP® Philippines, seasoned investment adviser, bestselling author of personal finance books in the Philippines and a YAMAN Coach™. To consult with a YAMAN Coach™, email [email protected]. To learn more about personal financial planning, attend the 113th RFP Program this September 2025. To inquire, e-mail [email protected] or text at 09176248110)

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Copyright 2025 Efren Ll. Cruz, RFP®. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without the prior written consent of the author.