Retirement Planning
What the domain tests
Retirement planning tests how to project replacement income from SSS or GSIS, employer plans, PERA, and personal savings, then stress-test for inflation and longevity.
Core rules
- SSS retirement is optional at 60 with 120 monthly contributions and mandatory at 65.
- SSS monthly pension = P300 + 20% of AMSC + 2% of AMSC for each credited year beyond 10.
- GSIS and private defined-benefit plans have their own formulas; do not mix them with SSS.
- Replacement ratio: target 70-80% of pre-retirement income for modest lifestyles; healthcare raises it.
- PERA and voluntary savings fill the gap; start early to use compounding.
Worked example
A member has AMSC P20,000 and 20 credited years. Pension = P300 + (20% × P20,000) + (2% × P20,000 × 10) = P300 + P4,000 + P4,000 = P8,300 monthly. If desired retirement income is P30,000, the gap is P21,700, to be filled by savings, PERA, or an employer plan. Reasoning: the formula uses AMSC and credited years, not final gross salary.
Traps
Assuming SSS alone is enough; using gross salary instead of AMSC; ignoring 13th month and inflation; forgetting that PERA withdrawals before age 55 trigger taxes and penalties; underestimating healthcare.