OPINION

Retire independently

BY KENNETH TESTON | DECEMBER 06, 2023

It has been a toxic Filipino culture for parents to rely on their kids for financial support throughout their retirement years. As a result, children are caught between the responsibility of supporting their parents and their self or future family. But like how children are taught to become independent as they grow, adults should reflect the same mindset and not pass on to their children the consequences of poor financial planning.

Many grew up with their grandparents living in the same household, some even with their uncles and aunts—not only because it is a Filipino norm to have extended families, or because the culture deems it responsible to take care of your parents during their senior years, but it’s the Filipino value ‘utang na loob’ at the root.

Roughly translated to ‘debt of gratitude,’ utang na loob means acknowledging someone’s act of compassion or sacrifice. Sadly, it has been erroneously interpreted as the beginning of an irrevocable connection, which cannot be simply repaid by money or material offerings.

This is also related to the Filipino axiom, “Ang hindi marunong lumingon sa pinanggalingan ay ‘di makararating sa paroroonan.” This is why, for many generations, Filipino children were manipulated by such toxicity into thinking that it is their responsibility to provide regular financial support, sometimes even full, to their parents after graduating or starting a job.

At an early age, it is common to hear, “Paglaki mo, ikaw naman susuporta kay mama at papa ha?” However, not providing financial support for your parents does not equate to neglect or abandonment. Caring is visible in different ways.

Proper family and retirement planning is key to breaking this toxic culture. Contrary to common advice, owning a house and having millions in bank savings before building a family is impossible unless you have crazy rich generational wealth. Having a stable source of income enough to pay off your home mortgage, cover your child’s education, and pay for an insurance policy are some realistic goals to consider instead.

Filipinos tend to be intimidated when discussing life and health insurance, which can be blamed on low financial literacy. Others would dismiss advisors offering insurance policies by saying, “‘di ko kailangan niyan,” or “sa susunod na lang,” until it is too late to get covered.

In August, Insurance Commissioner Reynaldo Regalado reported in his speech during the first Life Insurance Convention Philippines in Cebu City that the insurance penetration in the country is at a low of 1.75%. This accounts for roughly a little more than two million insured Filipinos out of the projected 115 million population by the end of 2023 according to the Commission on Population and Development.

Not to say the entire remainder of the population who does not have an insurance policy is reliant on their children for support during their elderly years, but the probability is there. Arguably, rapid inflation and penny-increases in wages make paying for insurance difficult, much less considering enrolling in one.

Looking at the state perspective, this behavior of reluctance to insurance coverage can be rooted in the country’s non-living economy, with the year-to-date inflation at 6.6 %based on the Philippine Statistics Authority’s findings in September 2023.

While the minimum daily wage was increased by a measly P40—from P570 to P610, that is only for workers in NCR. Provinces still have varying lower rates.

This large difference in the insurance of Filipinos is a visible indicator of the government’s failure to improve wages, reduce inflation, and establish new policies for more accessible social security.

Even the Social Security System (SSS) cannot provide any solid security at all. The strenuous filing process for benefit claims, the large portion of uncovered workers despite the universal policy in place, and risks of fund deficiency all point towards the broken system.

During a House committee hearing in March 2023, SSS chief actuary Edgar Cruz reported the state-run agency’s funding is expected to be inadequate by 2039 due to more benefits to pay but fewer member contributions, brought by projected population changes.

Cruz projected the deficit in the agency’s funding poses potential unpaid pensions and member benefits in the future: “After 2054, we will have debts, we can no longer pay in full the benefits of our SSS beneficiaries. We have an obligation to pay them beyond 2054, but our fund will no longer be enough.”

Even the Social Security System (SSS) cannot provide any solid security at all; the strenuous benefits-claiming process, the large number of uncovered workers despite the existing universal policy, and the projected risks of fund deficiency, according to its chief actuary Edgar Cruz, which can lead to unpaid member benefits and pensions after 2054 all point towards the broken system.

What the agency needs is a reform of its structure and policies, create more comprehensive planning to build sustainable programs, and advocate better awareness of social security.

In the end, it all comes down to three things: awareness, plan, and action: awareness of future responsibilities, effective and efficient plans for financial security, and breaking the cycle of relying on your children for support.

With the help of social media, the current generation is finally tackling this negative Filipino behavior that has been passed down through generations, while others are using their platforms to teach financial literacy.

It is not wrong to help parents financially, but in the country’s current economic situation, it is no longer sustainable to provide hundred percent support. The current generation must realize, should they wish to raise a family, it is not the child’s utang na loob they were brought into this world—it’s their responsibility to retire independently.