By Christopher Cervantes, RFP

In my numerous financial consultation, mentoring and coaching, majority of the people who asked help for planning chose retirement as their top priority. More than 80 percent of the people who sought advice from me are millennials. They used to be branded as YOLO (you only live once) generation often associated with spending time and money on hobbies and interests instead of saving for the future or retirement.

But my experience with them tells otherwise. They are becoming more concerned about how they can live free. Yes, they were careless of their money when they first earned. But who among wasn’t excited upon receiving our first paycheck? Like us, they are just being normal. As young people, their usual question to me about retirement is how they will manage their money once they retire. They are not concerned about how they will raise their retirement fund, knowing that with the proliferation of financial education nowadays, knowledge on growing money is just an ordinary thing. They are more concerned about managing their hard-earned retirement fund once they raise it.

This is not just a concern of young people. Even people nearing retirement are clueless as to what they should do with their retirement fund. As my usual advice, the only good way to manage retirement is to have proper discipline in handling budget. The usual reason for people having financial problems or financial gains is they have either good or bad budgeting. The same thing in retirement, budgeting will spell either disaster or success in one’s golden years.

Upon retirement, most financial planners say you will be needing 70 percent to 80 percent of your pre-retirement gross income. But the best way to calculate this is to create a monthly budget. When preparing a detailed budget, you need to be honest on which among the expenses have to be sustained and stopped upon retirement.

For example, if you haven’t prepared for your long term health care and are very dependent on your company’s benefits, you’ll be surprised to know how much you need to prepare for it. Thus, I always recommend to my clients to always buy the highest health coverage they can afford. During the first few years of your retirement, you might be spending more on travel and leisure, but later you’ll likely spend more on health.

If you’re 10 years away from retirement, you should be more careful about calculating for it. Try to seek help from a financial planner just to see if your projected retirement fund will be enough to meet your retirement income goal. Five years or less before your retirement is the time to track your spending just to know how you will use your money after working. With this, you’ll get an honest feedback on how long your retirement fund will most likely last. If it looks not enough to last for more than 20 years, increase your income, save and invest aggressively. If you can’t increase your income, still working after retirement age is another option. But to fulfill the potential cash flow gap during retirement, the best option is to reduce your planned retirement budget. Financial advisers say 4 percent is the ideal withdrawal from your fund during retirement. But many are questioning this idea nowadays due to the low-interest environment we have now.

Since millennials are children of baby boomers, they learned the importance of retirement preparation from their parents who are struggling now. They don’t want to follow the wrong money management practices of their parents.