Planning to retire early? Here are some tips

MANILA, Philippines – When planning for an early retirement, it is important to focus on a “magic number” and have the discipline to be faithful to it.

Sun Life financial advisor Samuel Pineda said the simple formula to save up for an early retirement is to spend less than you’re earning, yet most fail because they tend to give in to short term goals.

“Despite this simplicity, a lot of people will still choose to forego the long term goal and go for the short term goal,” he told ANC’s “On The Money.”

Pineda said retiring at a young age can be attained with the proper education and investment tools. He said merely relying on a savings account will not be enough.

“The more people understand it the less they will be afraid of it and the more quickly they will act on it,” he said.

Pineda suggests using investing tools that earn at a higher rate than inflation and have long term benefits.

“While there are a lot of products that you can buy, I think there are things you should stay away from that are more short term,” he said.

He said investing in real estate is a good idea, as long as the investment is made in a developing area with positive surrounding conditions.

According to Pineda, a study showed that of the people in retiring age, only 2 percent are financially independent; 20 percent continue to work because they can’t afford to retire; while the remaining are dependent on charity or family.

He said this “vicious cycle” has to end.

“Retirement is when you no longer need to actively work and you have things in place such that your passive income is able to support you with the lifestyle that you can comfortably live with through the rest of your days… It depends primarily on the plan that you’ve laid out,” said Pineda. –ABS-CBNnews.com