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Wednesday, October 8, 2014

Your Kids Are Not Retirement Plans

My job as financial adviser gives me a rare opportunity to witness how people think in terms of money, savings, investments and how they integrate these thoughts in their lives. Personal finance has always been a touchy, "private" subject in this country, which should be of no surprise given that the word personal is in the term. So it is a skill to be able to extract financial information from clients without appearing to be intrusive, and I find that the best way to do this is to let clients tell their story.

After all, I don't know anyone who doesn't like to talk about themselves.

But after meeting with a number of clients, I find it disturbing - to say the least - that a percentage of parents find themselves feeling good about their financial future because of their offspring. I was once again reminded of this mindset with a recent client call I made.

Mr. X was referred to me through another referral who became my client. I was apprised early on that Mr. X took to heart the biblical order of "go forth and multiply," and true enough, as soon as I met him, I learned that he and his wife had 6 kids.

"6 kids! Wow! Mr. X, I have to say that this is quite a departure from what I have observed with many people I see these days, the most number of kids in a family I usually encounter is 3."

He beams with pride. "They make me happy. Especially _________ (the youngest), she can be stubborn but also very malambing. (affectionate)"

"I have no doubt. And daughters na bunso (youngest) seem to have a special bond with their fathers, always."

We get to talking about his business and I ask him how it is doing, and while it sustains him and his family, he sees the endpoint of the business' lifespan as the time when his youngest will have graduated from college. I then ask him if he looks forward to retirement with his wife.

"Yes, and especially since I have six kids."

I nodded. "A large family feels warmer, somehow. I remember when my grandfather would gather all of us at his house, with so many uncles, aunts and cousins, happy times."

Mr. X then takes the pin out. "And, of course, I can relax knowing I will be taken cared of by then."

For a moment, I thought he was referring to a well-oiled financial plan that he has already begun. "That's good, Mr. X...after all, preparation is key if we want a comfortable retirement. How long have you started preparing for it?"

(Courtesy of

He then decides to drop the grenade. "My kids will take care of me and my wife."

I could see my jaw drop in my mind. "But, Mr. X, won't that be something they have to decide for themselves, especially if they plan to have their own families as well?"

"Not really. I always remind them of the hard work I put in just to get them their education, so it's only fair that they pay me back later."

Since I could see where his train of thought was going, I decided to inject a little humor in the conversation. "So which of your six kids will you live with? Will you decide by drawing lots or a dice throw?"

He seems to have given this matter some thought since he answers straight away. "We can live right here, where we're at. But they'll need to give us an allowance, every month. Binibiro ko nga yung panganay ko (I've been joshing with my eldest) that I should have them spread their allowance contributions over different dates, haha!"

"It's a plan, alright, Mr. X." I smiled back. "However, would you be willing to make your own retirement plan up? I can help give you a summary of how much you'll probably be needing then on a monthly basis."

As with most clients, they usually forget to include the effects of inflation by the time they retire, and focus on what they're spending right now. After accounting for inflation, he is taken aback by how large the amount translates to in 20 to 30 years.

"Wow! Ang laki pala kakailanganin namin! (We need a huge amount) Good thing there are six of them, huh? Di masyadong mabigat (it's not too demanding) if divided by 6."

"Mr. X, how sure are you that all 6 of them will be able to support you then? While it's good to wish them success in their future endeavors, the current job market is such that I know people with master's degrees who are working in call centers simply because they can't find work...wouldn't it be more prudent to prepare for your retirement yourselves?"

He turns to me with a knowing smile. "Maybe. But that's exactly why I have six kids...they can't all be failures, right? Surely, at least half of them will be successful."

I can see that he was using the matalino ako (I'm sly) route, so I thank him for his time and leave him with these parting words. "Thank you, Mr. X. While you seem to have a plan for retirement, the biggest loophole I observe is that it is dependent on others: on what others will earn, on what others are willing to give to you. My job as financial adviser is to help people take control of their own financial well being, with variables under their control. If you are ready to start a plan that is of your own making, please let me know."

And while he seems to be pleased with himself, I cannot help but be bothered: Bothered by the fact that he views his children as hens laying the proverbial golden eggs. Bothered that he couldn't be bothered to save up for his own retirement. Bothered that he would knowingly be dependent on other people - their income, decisions, moods, situations - in order to survive.

It was a plan, indeed: a plan that would fail because he failed to plan on his own, for his own.

None of us can see the future: who knows, Mr, X may be right. One of his kids may turn out to be the Bill Gates of the Philippines, or maybe one of them can surpass Manny Pacquiao as this country's highest earning professional boxer. But there's a reason their names and reputations precede them: they're one-of-a-kind, the kind that comes along only in the bluest of moons.

We need to impress on ourselves, and especially on our children, that we control our financial future. We need to stop being fatalistic, or depend on somebody else - whether it's the government or our offspring - to feed us. Until we make this conscious decision to prepare for our own finances and futures, we will always be reduced to begging.

Is that how you want to spend your golden years?


  1. Love how you write. And as for financial education, been clamoring for lessons since 2 years and Im still illiterate now. I wish somebody would help me.
    Keep writing!

  2. Love how you write. And as for financial education, been clamoring for lessons since 2 years and Im still illiterate now. I wish somebody would help me.
    Keep writing!