The Index shows a huge discrepancy between the levels of people’s
target retirement savings, with plans ranging from HK$500,000 to over HK$20
million.
80% of people expect to cut their living standards in old age
The earmarked money to enjoy retirement is insufficient: 40% of people have
nearly a nine year financial planning gap
People are living longer and employees today face retirement while still supporting
their parents and children at the same time
Attitudes are changing--people are very keen not to rely on their own children
All together these factors put huge financial pressures on Hong Kong people
Sun Life’s in-depth Unretirement Index surveyed over 400 employed and
retired people in Hong Kong in early 2010. It follows similar studies Sun Life
Financial conducted in the USA and Canada with a target of exploring the pressure
put on families’ savings during the financial crisis and the fact that
people were being driven to work later into life to meet funding shortfalls.
“Many Hong Kong people are facing a perfect storm, with
the need to support their parents and children at the same time as preparing
for their own looming retirement, and not wanting to be a burden on their own
kids in the future”, said Eugene Lundrigan, Vice President, Marketing
& Strategy Sun Life Financial. ”The good news is that when people
have consulted financial advisors and thought through their needs, their financial
planning is much better. Hong Kong people need to focus hard on savings for
retirement and start planning earlier.”
There is a substantial funding gap for the average worker. Life
expectancy is now well into the 80s but retirement is planned on average for
the age of 61, with planned funds to cover just 18 years. Most people interviewed
(80%) expect to lower standards of living in retirement to compensate for a
shortage of income, but have not appreciated the size of the funding gap they
may face, particularly considering potential future medical costs and the need
to support their family.
The results in Hong Kong also tell an interesting story about
people who will support their parents as well as their own children.
In Hong Kong, families are still expected to play an important
role in meeting retirement needs and covering financial shortfalls. 64% expect
the costs of supporting retirees in the family to increase. 80% are prepared
to use their own retirement savings to look after parents and children.
People working now do not want to be a burden on their own
children – a big generational change in Hong Kong. 29% of the younger
generation expect to get financial support from their children during retirement,
compared with 61% of the retired generation.
The Unretirement Index also discovered an ‘Advisor Advantage’ that
helps to narrow the retirement planning gaps. 35% of those who consulted a financial
advisor had a clear retirement plan, versus 17% of those who hadn’t. Financial
advice also led people to higher retirement savings targets using a wider variety
of savings tools.
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