Grow Your Money: Retirement planning 101 for self-employed and freelancers


Posted at Jul 31 2017 11:46 AM | Updated as of Jul 31 2017 12:33 PM

Grow Your Money: Retirement planning 101 for self-employed and freelancers 1

More and more people are discovering the attraction of being their own boss. As freelancers, you can set your own work hours. As self-employed, you have the freedom to build your own business in a field you are passionate about.

But while you are pursing your interests, who’s watching out for your retirement? As an employee, one of the benefits is a retirement plan managed by your company. When you’re a freelancer or self-employed, planning for your retirement falls on your lap. Not to worry though - all it takes is a little planning on your part.

Before we discuss how you can plan for your retirement, let’s first examine the thinking that formally employed persons have better retirement benefits. This is not necessarily true. Not too many companies offer retirement packages on top of what the government offers. What these companies offer is very valuable administrative support that ensures you have “forced long-term savings.” In short, whether you like it or not, they make sure you pay your SSS by deducting it from your salary.

Among employees whose organizations offer retirement fees, those who stay the longest get the most benefits. If you only stay for a year in that company, you’re not going to get much. This is simply how retirement savings work. When it comes to growing your money, time is the most valuable element you need.

What do all these things mean to you, the freelancer or self-employed individual? This means that you have to work on your own administrative needs (recording, filing papers and making actual payments), and that you have to starting planning for retirement as early as you can to exploit the advantages of time.

Here are seven items you can consider paying for as part of your retirement planning process:

1. Social Security. Whether you are an employee or self-employed, SSS payments are actually mandatory. SSS has a chart of how much self-employed individuals should pay based on their income. Payments can be paid through many banks, either on a monthly, quarterly, or yearly basis. Take note of the payment deadlines and keep all documents to ensure that your payments are properly credited to your account.

2. Philhealth. This is another requirement which you should never overlook, as there is no telling when you will get sick and will need to be hospitalized. You will fall under the category “Individually Paying Member” and will need to submit the same identification requirements. Payment is done monthly, and may be remitted through banks. Always keep records of your documents and make sure you pay on time.

3. Pag-IBIG Fund. This fund provides housing loans. Since housing and real estate are important components of retirement planning, you should make sure to make your Pag-IBIG payments. Voluntary payments are accepted through banks and payment centers. By making regular payments, you can realize your goal of owning property which you can live in and could potentially increase in value, providing you a home and contributing substantially to your retirement needs.

4. Personal Equity & Retirement Account. Also known as PERA, this is a government-approved voluntary retirement savings account program, which provides tax incentives. You can qualify for this if you have a tax identification number. A number of large banks are now offering PERA investment funds. You can invest up to P100,000 a year in PERA funds, for which you will get income tax credit, which you can offset from your income tax payments.

5. Mutual and other investment funds. There are several mutual funds and UITFs being offered by financial institutions for retail investors. This will allow you to take part in the growth potentials of professionally managed funds, each one tailored for various investor needs. The opening requirements are very affordable at around P5,000. Contribute regularly to these funds so that you can take advantage of their growth potential.

6. Insurance plans. An insurance plan is another retirement planning tool that you should have, as it ensures that your beneficiaries will receive financial assistance in the event that you pass away. An Insurance plan can also provide you with financial support should you become disabled for a period of time. Many insurance plans now come with a retirement benefit. You can opt for a straightforward insurance or one that has more features (and therefore costs more), depending on your needs.

7. Health insurance. In addition to Philhealth coverage, you should consider expanding your health coverage, either through health insurance or through a health maintenance organization (HMO). The role of health insurance in retirement planning is to protect you from huge bills that can deplete your funds and push you to poverty. There are many providers of health insurance. Go over what each one has to offer and choose the one that you feel is most appropriate for your needs.
Working freelance doesn’t mean you have to say goodbye to a retirement fund. With enough preparation and business savvy you can have enough money to live on when you finally decide to stop working in your old age.


Grow Your Money is an editorial partnership between and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.

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