How to build a healthcare fund for your retirement
A recent survey reveals that Filipinos believe that they only need to save just 2.1 years of personal income for retirement. This is significantly less than the regional average of 12 years and grossly insufficient considering the nearly decade-long gap between the retirement age of 65 and the average life expectancy of 72. And for most Filipino retirees, funds are depleted faster because they’re typically stashed in low-interest savings accounts.
This is compounded by not factoring in the reality that a retirement fund should also include healthcare on top of living expenses. If not planned for, these unexpected costs can wipe out your funds and financial stability.
The good news is there are ways to be proactive and you can plan for your health expenses and long-term care in your retirement so you can ensure personal comfort, maintain your independence, and continue building a lasting legacy for your family.
Assess future needs
The first step in this process is understanding your potential healthcare needs. While PhilHealth provides some coverage, it may not cover all your healthcare needs, especially if you require specialized or long-term care.
It's vital to evaluate your current health status and consider any hereditary or lifestyle-related health risks. This assessment will guide you in planning for potential costs and seeking appropriate insurance coverage.
Invest in health insurance
Health insurance is a cornerstone of financial readiness in retirement. It's essential to choose a policy that provides ample protection against high medical costs. Consider policies that offer broad coverage, including outpatient services, hospitalization, and critical illness.
With AXA Health Max, you can be covered against 56 major and 18 minor critical illnesses until age 100. You also have the option to advance a portion of your Sum Insured starting at age 70 which you can use for immediate needs, like treatment or recovery from an illness.
Remember, premiums tend to be higher for seniors, so it's advisable to secure insurance before retirement or early in your retirement.
Create a separate account for health savings
Building a fund specifically for your healthcare needs can provide an additional layer of security, ensuring you don't have to dip into your retirement savings or investments, which can compromise your financial legacy goals.
But, you wouldn’t want to just put your money in a savings account where it will eventually lose value because of inflation. It’s best to leverage as many opportunities as possible to grow your funds. You can do this through:
- Time Deposit - You leave your money alone for a pre-specified period and accumulate guaranteed interest on it. Time deposit rates are higher compared to the interest rates of traditional savings accounts as funds remain on hold for a fixed period, allowing banks to re-invest or lend the funds for higher profits.
- [UITFs](/investments/uitf - Put money in a fund and let professionals manage your investment for you.
The banking instruments listed above let you put in money that you can take out after you've increased its value. For instance, UITFs are designed to allow you to redeem your investment anytime (but note that you are subject to an early redemption charge if you redeem within the 7-day holding period). UITFs also vary from short-term to long-term, depending on the underlying assets of the fund or where the fund is invested. It’s recommended to stay invested in them for a reasonable time to maximize their earnings potential. This means that the money you put aside for your health will keep growing while you’re healthy.
If you’re new to UITF investments, you can learn more about it here. Metrobank offers a curated list of UITFs that let you do more with your money, and it provides you with the education you need to maximize your investments.
Taking a proactive approach to your healthcare in retirement not only secures your comfort and independence but also helps in building a lasting financial legacy for your loved ones. A well-planned retirement is the best gift you can give to yourself and your family.
Learn more about how you can make the most out of the fruits of your labor.
