Showing posts with label Retirement. Show all posts
Showing posts with label Retirement. Show all posts
PERA Tax Rules are out!
I am a Money Magnet! We are Money Magnets!
News Update: The Personal Equity and Retirement Account or PERA tax rules have already been issued by the Bureau of Internal Revenue. With this development, RA 9505 or the PERA Law which was signed 3 years ago can now be finally implemented.
According to the news article from Business World Online:
Revenue Regulations 17-2011, published by the BIR yesterday, state that a resident Filipino can contribute a maximum of P100,000 per year to a PERA account, while overseas Filipino workers (OFWs) are allowed up to P200,000. An individual can hold a total of five PERA accounts.
The contributions, which will be received and administered by accredited financial institutions, can be invested in various products such as trust funds, mutual funds, insurance, pre-need plans, government securities and listed equities.
The contributions are exempted from a host of taxes such as the final withholding tax on interest, capital gains tax on the sale of bonds and shares, 10% tax on cash and property dividends and regular income tax.
PERA holders are also entitled to an annual tax credit equivalent to 5% of all their contributions for the year. Resident Filipinos can charge this tax credit against their income tax liability. OFWs, exempted from income taxes, can charge this against any other national internal revenue tax liability.
The PERA assets will be released once the account holder reaches the age of 55, as long as he or she has made contributions for at least five years. The release can be made either as a lump sum or as a pension. The assets will also be completely released upon the death of the PERA contributor, regardless of age.
Early Retirement is not Impossible
I am a Money Magnet! We are Money Magnets!
Sharing this article from BDO Private Bank Wealth Management Magazine called "So you Want to Retire Today?" It highlights some important factors to consider when we eventually decide to retire. It starts off with the line "Early retirement is not impossible. All you need is serious planning." True enough, everyone can retire early and be free from the corporate world as long as we are determined to plan for it. Read on to know more about things we need to consider for retirement.
by: Judith Juntilla
During the high-flying times of the financial markets in the Philippines in the early 90's, many newly minted Masters of the Universe were raking in six-digit salaries and swimming in bonuses and commissions. It was a good time to be a professional in the finance industry; the world was for the taking and nothing was impossible.
Even retiring before the age of 40.
Personal Equity Retirement Account (PERA)
I am a Money Magnet! We are Money Magnets!
News Update: The Personal Equity Retirement Account (PERA) tax rules have already been submitted to the Finance department and are awaiting approval. This is good news for all Filipinos, especially Overseas Filipino Workers, because we can now open retirement savings accounts, similar to the US' 401(k), that are tax free!
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| Retiring peacefully - PERA ACT Philippines |
Based on the PERA Act, Filipinos can save for retirement with a maximum contribution of 100,000 pesos a year. Overseas Filipino Workers are provided a higher annual cap of 200,000 pesos. While five PERA accounts can be maintained at any one time, the annual contributions must not exceed the set limits. Continue reading to learn more about the tax benefits of PERA investments.
Secret No. 5: Protect Yourself (Retirement Funds) Part 2
This is part 2 of Secret no 5: Raising your Financial I.Q. from Bo Sanchez' 8 Secrets of the Truly Rich. In this section, we tackle issues about how to protect yourself and building your own retirement fund.
Protect Yourself Adequately
Most Filipinos are under-insured. Some don't even have insurance at all. We need to protect ourselves so that the family's we live behind will have sort of an "income replacement" when we die. Bo suggests that you insure yourself equivalent to 10 times your family's annual expenses. (Example: if your family spends P100,000 a year, you will need a P1 million insurance) This way your family can have more than enough time to look for a new income source. Better yet, they can be financially wise and invest the entire amount in a fund that earns 10% a year. This way, the P1 million will earn P100,000 a year which is the same amount your family was spending while you were alive. This way, they're provided for the rest of their lives!
Build Your Retirement Fund Now
Dying young can be a problem and it would be important to protect your family through insurance. However, living too long can also be a problem. In a survey on people above 65 years old, around 40% have to keep on working to survive, around 30% depend on their relatives to survive, around 8% depend on charitable institutions, and only 2% are financially independent. In order to protect yourself from living too long, you need to build your Retirement Fund now.
How to Build your Retirement Fund?
1. Automatically save 20% of your monthly income.
2. Invest as Early as You can.
The earlier you save, the more you'll have in the future.
(The power of compounding interest)
(The power of compounding interest)
3. Don't Put Your Retirement Fund in the Bank.
Instead Bo suggests that we all become Investors and put our long-term retirement funds in mutual funds, bond funds, equity funds and stocks. Although these instruments present more risk, investments put in these instruments in for the long-term have produced far greater yields compared to regular bank deposits.
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Achieving 10 Million by Age 60
In order for me to get 10 million by the age of 60, I'll have to invest at least 62,000 every year starting at the age of 30. The requirement is to have it compound at a per annum rate of 9% net. If I start at age 40, I'll have to invest 162,000 a year just to get to the same amount! It really pays to plan ahead and start early!
Watch the video here in Salve Duplito's blog. Don't forget to read about the "Important things to remember" per age bracket when it comes to financial planning.
Here's the list by Salve Duplito for those in their 20's and 30's.
Important things to remember:
- Automate your savings
- Start with saving at least 10 percent of your income and increase from there
- Start setting up an emergency fund up to six months of your living expenses
- Invest unexpected windfalls instead of spending them on gadgets or gimmicks
- Try mutual funds
- Inquire about your company’s retirement plan package
- Invest in stocks if you have the stomach for the roller coaster ride in the market. Over long periods, stocks have gone up much more than they have gone down
- Consider bonds if you are a conservative investor
- How much to invest for the long-haul? A rule of thumb says you should subtract your age from 100 and then add a percentage sign
- Just say no to debt other than a home mortgage
- If you can’t live without plastic, pay the entire balance each month
- If you have debt and have savings, take out your money from the bank and pay your debt. Paying off a loan can be one of the biggest investments you can make
- Review your health benefits at work to make sure you have the coverage you need
- Even if you are just renting an apartment, be sure you have insurance on the contents
- You do not need life insurance if you have no dependents. Once you have children (or if your parents are now dependent on you), you will probably need more than at any later time in life
- No-frills term insurance is usually the simplest and lowest cost option
- Think carefully about buying a house versus renting. Since the fees can be steep, buy a home only if you are going to live in it and do not need to relocate in a few years
- Buy only a house you can afford. A lot of people end up getting strapped for cash because of the tendency to stretch themselves to buy the biggest house they can
- Start thinking about writing a will
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