- The desired retirement reserves among the respondents from Hong Kong working population is HK$4.03 million (median)
- 67% of respondents do not have sufficient retirement reserves; only one out of every three Hong Kong working people can enjoy a worry-free retirement
- Majority of respondents consider those with monthly income of over HK$50,000 as ‘middle class’, and 41% of this ‘middle class’ have inadequate retirement reserves
- Over 80% of the ‘middle class’ consider their lives are ‘pathetic’; as 71% of them think they spend more than they earn; 69% think property prices are far beyond what they can afford
- Nearly 40% of respondents are unaware of their MPF investment portfolio; nearly half of them do not know their MPF investment returns; and almost half irregularly or even never review their MPF account
- Only 35% of respondents regularly discuss and share their retirement plans with their partners
- When their partner overspends, only 40% of respondents will discuss with their partner to find a solution. Over 40% of male respondents will save and let their partner spend, while 75% of female respondents will save money privately for their own personal use
AIA Pension and Trustee Co. Ltd. (“AIA MPF”) today announced the findings of the 7th “AIA MPF Desired Retirement Tracker” (the “Survey”). The Survey was conducted via online questionnaires and face-to-face interviews between 3 and 20 August 2015, engaging 1,110 respondents aged 18 to 65 who possess at least one MPF account, to examine the goals and views of Hong Kong’s working population regarding their desired retirement as well as the possibility of fulfilment. To ensure the Survey was representative, survey data and responses were weighted against the demographics of Hong Kong’s working population, including age, gender and monthly personal income. The Survey was conducted by Cimigo, an independent market research company.
Hong Kong’s working population hope to have HK$4 million for retirement – but only a third will enjoy a worry-free retirement
The Survey revealed that the average desired retirement age is 61.1 years old and the amount of desired retirement reserves is HKD$4.03 million (median). After applying independent actuarial calculations1 for each respondent, 67% of respondents would not have enough money to support their desired retirement lifestyle and will face a shortfall in their retirement reserves. In other words, only one out of every three respondents can enjoy a worry-free retirement, underscoring the magnitude of the retirement savings crisis in Hong Kong.
Middle class faces tough road to retirement – the more they earn, the more they spend
The middle class was a key focus of this Survey: most respondents defined ‘middle class’ as those with monthly income of over HK$50,000. The Survey also showed that over 40% of the ‘middle class’ do not have sufficient retirement reserves, reflecting that high incomes do not guarantee a worry-free retirement life. Among the ‘middle class’ respondents, 82% of them consider their lives ‘pathetic’ because they spend more than they earn (71%) and also because the property prices are far beyond what they can afford (69%).
Respondents do not actively manage their MPF accounts – half are unaware of their investment returns
Although it is generally recognised that good financial planning helps to address the problem of insufficient retirement reserves, the Survey discovered that nearly 40% of respondents are unaware of the investment portfolio of their MPF. Nearly half of them do not know their investment returns and almost half only irregularly, or even never, review their MPF account. The lack of active management of MPF reflects that they do not understand the important role MPF plays in retirement protection.
Partners lack common financial goals, adding to concerns about their retirement future
Although retirement may be a long way off, differences in attitudes between partners regarding financial management can have a negative impact on their preparation for retirement. The Survey showed that only 35% of the respondents regularly discuss and share their retirement plans with their partners, suggesting that a large number of partners lack common financial goals. When a partner overspends, only 40% of respondents would discuss with their partner and find a solution together. In terms of how respondents react to their partner’s overspending, over 40% of male respondents would save money for their partner to spend, while as high as 75% of female respondents admit they would save privately for their own personal use.
Mr. Stephen Fung, Chief Executive Officer of AIA MPF, remarked, “The shortfall in retirement reserves among our working population cause for alarm. The AIA MPF Desired Retirement Tracker found that even the middle class who have high incomes also encounter the same challenges. Using our Retirement Quotient (RQ)2 model to explain, one possible reason for this could be the high target they have set. They are unable to meet their retirement saving or investment objectives because they spend more than they earn, making it impossible for them to save enough money for their retirement needs. I suggest them to review their daily expenses and manage their spending wisely. For example, if they reduce the frequency of dining out with friends which could run into the thousands, they could add this money to their retirement reserves for better retirement protection.”
“The Survey also revealed that Hong Kong’s working population do not actively manage their MPF investments, indicating they are lacking in Financial Knowledge, which is a key component of RQ. MPF is a fundamental element in retirement protection and to pave the way to a more comfortable retirement, the public should acquire more financial knowledge through various channels in addition to actively managing their MPF.”
“Moreover, as the society has a strong consumerist culture, there is a pressing need for partners to set common financial goals and share their retirement plans to support each other. Social Influence from Family and Friends is another key component of RQ. A happier and more financially secure retirement future can be achieved with a clear and mutual goal.