The ideal retirement funds of people who live in Hong Kong has risen to HK$5.1 million, a 17% increase compared to last year. Hong Kong people expect to accumulate actual retirement funds of HK$3.19 million, equivalent to 62% of their stated ideal total, with a gap of HK$1.92 million.
This is according to Allianz Global Investors’ fourth annual Retirement Confidence Survey. The survey results also show that only 29% of people feel confident about their retirement, a slight decrease from the previous year. Respondents cited concern over the economic outlook and a depletion of consumption power as reasons for their lack of confidence.
The ideal retirement age for respondents is 61.4, while the average planned age of retirement is 62, a gap of 0.6 years and a continuation of the trend from last year’s survey. Year-on-year, respondents in both categories stated they would postpone retirement by 0.2 years. According to the survey, 61% of respondents also said their main investment goal is to protect themselves against inflation. This is because they believe their retirement funds can sustain approximately 12.2 years of retirement life on average. Hong Kong citizens are mainly conservative in their approach to managing finances after retirement, with 62% of respondents stating they will cut post-retirement living expenses.
The younger generation tends to underestimate their retirement needs, the survey found. In this age group, ideal and actual retirement funds are projected at HK$4.54 million and HK$2.75 million respectively, lower than most other age groups. Moreover, among respondents aged 25-34, 47% said they are still too young to prioritize retirement planning. Additionally, 40% of this age group stated they prefer to spend on overseas travel rather than save for retirement. In terms of investments, this age group also allocates 47% of its current assets to Hong Kong dollar cash savings, depleting capital appreciation potential.
AllianzGI head of client relations, Iris Ma Mei-suen, says, “The younger generation still has low awareness of retirement planning, as evidenced by expense allocations and ideal retirement fund numbers. Over half of this group has never considered or planned for retirement, and they are missing out on a golden opportunity to accumulate wealth.”
With regard to family status, single and married pre-retirees show different values and approaches to retirement and investing, and this significantly influences retirement planning. More than one-third of married pre-retirees with children view raising their children as the top expense priority, in addition to mortgages and providing for their parents. Married pre-retirees were most proactive and confident when planning for retirement, with 46% stating they prioritize expenses on retirement savings and investing and more than one-third, setting aside extra savings of HK$6,000 every month.
Having more children in the family results in a narrower gap between ideal and actual retirement funds by HK$3.29 million for retirees without children, and HK$1.43 million for those with two children. Having more children also produces a higher level of confidence in investing for retirement, at 35% for families with two children (no children: 19%). Families with working parents with two children perform exceptionally well in retirement planning; 39% said they are confident they will reach their ideal retirement life, the highest rate of all family statuses, and notably higher than single pre-retirees, at only 28%.
