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Hongkongers starting retirement plans earlier
Post-Covid attitude shift, with healthcare costs, inflation, long recession top concerns
The Asset 5 Jun 2024

The Covid-19 pandemic raised a sense of urgency in starting their retirement planning among Hongkongers who have yet to retire, with the average age of planning for retirement dropping from 45 in 2018 to 40 in 2024, according to a recent survey.

Non-retired Hongkongers have significantly higher expectations for investment returns post-Covid – 5.7% in nominal returns annually, up from 3.7% per year in 2018 – finds Schroders Hong Kong Retirement Survey 2024.

The top three retirement-related concerns among respondents are higher healthcare costs than expected (76%), inflation reducing the value of assets (73%) and a potential prolonged recession affecting their life and career (72%), which may affect their ability to accumulate wealth for retirement.

Shift in attitudes

There is heightened eagerness to prepare for their future, with nearly half (48%) of those surveyed saying they feel more strongly that there is an urgency to save for potential healthcare needs after retirement now compared with the pre-Covid period.

In addition, 46% and 38% respectively now agree with the importance of effective wealth management in retirement planning and making sacrifices in their current lifestyle as part of their retirement plan.

Meanwhile, it is alarming that some respondents live in the present and, the survey notes, are prioritizing experiences even more now over financial security in the future. Over one-third (36%) indicate that they agree more with the statement that investing in immediate experiences holds greater importance than saving for retirement today compared with the pre-Covid period.

HK$2.4 million gap

Overall, Hongkongers are still underestimating the longevity effect and are in reality more likely to outlive their assets. While post-retirement years in Hong Kong average 22 years, according to the survey findings, respondents expect only 15 years of retirement on average.

There also appears to be a potential shortfall in financial preparedness for retirement among non-retirees. The survey points to an average HK$2.4 million gap between desired financial reserves for retirement and expected expenditure.

Furthermore, when reflecting on their retirement plans, only 1 in 2 (53%) of non-retired Hongkongers surveyed feel confident they will achieve their desired financial reserves by the time they intend to retire. The median intended retirement age is 62.

It is no surprise, therefore, that 73% of non-retired Hongkongers, the survey states, are prepared to work in retirement, compared with 40% of their US counterparts.

“While many Hongkongers are willing to work in retirement, our global experience in pensions investment suggests that working longer isn’t necessarily a solution in full to financial shortfall,” says Lesley-Ann Morgan, Schroders’ global head of pensions and retirement. “It would do well to be more proactive in their retirement planning, as early as possible.”

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