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Sun Life Financial Unretirement Index
HONG KONG PEOPLE DON’T KNOW HOW MUCH THEY WILL NEED FOR RETIREMENT
Hong Kong study shows ‘perfect storm brewing’ as people are not saving enough
There is a big gap between the reality of people’s financial needs in retirement and people’s savings, according to the first edition of the Sun Life Financial Unretirement Index.
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.
Methodology
| Conducted by | Acorn |
| Methodology | Quantitative face to face interviews |
| Sample Size | 406 people were interviewed. 354 people were employed, 52 people were retired |
| General Criteria | The working sample incorporated people aged between 25-55, in full or part-time employment with a minimum monthly household income of HK$20,000. The retired sample incorporated people aged between 56-70, no longer engaged in a salary paying job and incurring a minimum person expenditure of HK$4,000 |
| Sampling approach | The age and gender sample split was determined according to population distribution in Hong Kong |
About Sun Life Financial
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of December 31, 2009, the Sun Life Financial group of companies had total assets under management of $433 billion. For more information please visit www.sunlife.com.
Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.
