Research from Sun Life Financial finds that nearly half (46%) of Asian workers are not planning to save until five years before retirement.
By Maggie Mancini
The APAC region faces a major demographic shift, with people over 60 expected to account for nearly a quarter of the total population by 2050, according to a recent survey from Sun Life Financial. The survey of more than 3,500 respondents from China,Hong Kong, Indonesia, Malaysia, Philippines, Singapore, and Vietnam aims to understand expectations and planning practices for senior living.
Surveys show that as retirement life planning shifts from reliance on family and state pension systems to personal savings and investments, more and more people are eager to achieve financial independence in old age. Saving for retirement is currently listed as the top financial goal of Hong Kong’s working class in the next 12 months. However, many people are unprepared for the financial realities, with 46% of respondents not planning for retirement expenses until five years before retirement, and 17% having no idea about retirement planning.
While most respondents will set aside at least 10% of their income for retirement, 22% have no funds set aside. When asked about their plans for income sources in retirement, the average expectation is that 31% of income will come from cash savings, reflecting that most people may miss the opportunity to maximize their retirement income through investments to ensure that their income can keep pace with inflation.
Approximately 28% of retirees admitted that they had not planned for retirement expenses, and 11% of the retirees surveyed were caught off guard because their expenses were higher than expected. As inflation continues to rise, the amount of expenses seems to be increasing.
For these retirees, the main reasons for higher-than-expected expenses are overall living expenses (57%) and medical expenses (43%). Therefore, many people can only cut down related expenses (71%) and give up treating certain diseases (57%).
About 8% of Hong Kong retirees regret their past financial decisions. The biggest regret is not investing wisely (80%), followed by insufficient savings (60%) and failure to set aside medical expenses (60%).
Young people seem to be aware of the challenges ahead and adjust their expectations accordingly. Hong Kong office workers are expected to retire at 66, five years later than the average retirement age for retirees today.
Similarly, 12% of non-retirees have actively postponed their retirement plans, compared with only 9% of retired people who have made the same choice, reflecting the changing economic environment and personal circumstances. The main reasons for delaying retirement include the need to increase savings (58%), increased living expenses (47%), and the desire to remain active in the workplace in old age (35%).
About half (51%) of those expected to delay retirement cite potential cost-of-living increases, compared with 17% who had delayed retirement.
