Hong Kong (3 October 2024) – As Asia Pacific faces a significant demographic shift with nearly one in four over the age of 60 by 2050 ¹ , new research by Sun Life  reveals challenges and opportunities for retirement planning in Hong Kong.

The research, titled Retirement Reimagined: facing the future with confidence, surveyed 506 respondents in Hong Kong as part of a study of over 3,500 respondents across mainland China, Hong Kong SAR, Indonesia, Malaysia, the Philippines, Singapore, and Vietnam, about their aspirations and planning practices as they prepare for old age.

Majority are ill-equipped to deal with financial realities of retirement

The research reveals growing desire for independent financial security in old age as retirement plans shift from state pension schemes and reliance on the family unit to prioritize individual savings and investments. Saving for retirement was cited as the number one financial goal over the next 12 months across all age groups surveyed. However, many are ill-equipped to deal with financial realities as 46% will leave planning around retirement expenses until five years or less before retirement, and a worrying 17% will not plan for this at all.

Rainbow Pan, General Manager, Wealth & Pensions of Sun Life Hong Kong Limited, said: “Hong Kong, being one of the regions with the longest life expectancy globally, sees many individuals facing the prospect of over 20 years in retirement. However, our research indicates that many respondents have not adequately prepared for this extended period. It is crucial for working population to commence saving early and to harness the power of compound interest through investment to ensure a financially secure and worry-free retirement."

David Broom, Chief Client and Distribution Officer of Sun Life Asia said: “The retirement landscape in Asia is undergoing a profound transformation, driven by increased longevity and shifting societal norms. Our research shows that while independent financial security is seen as the foundation for a rewarding retirement, many people remain unprepared for the realities they face. Early planning and disciplined saving are key to facing your golden years with confidence.”

While most respondents save at least 10% of their income for retirement, an alarming 22% do not. When asked about planned sources of income in retirement, the average expectation was for 31% of income to be drawn from cash savings, underscoring a potential missed opportunity to maximise retirement income through investments and ensure it keeps pace with inflation.

Retirees caught off guard by higher costs and regret insufficient preparation

In a warning sign to future generations, 28% of retirees expressed that they had not planned their retirement expenses and 11% of retirees report being caught off guard by higher-than-expected costs, a number that looks only set to grow as inflation continues to bite.

For those caught off guard by higher costs, the key factors are the general cost of living (57%) and healthcare expenses (43%). In response, many have been forced to cut spending (71%) and forego medical treatment for certain conditions (57%).

Approximately 8% of retirees express regret over past financial decisions with the biggest reasons being not investing wisely (80%), followed by not saving enough (60%), and not planning for healthcare costs (60%). 

Younger generations are adjusting expectations: retiring later and saving more 

Interestingly, younger respondents are increasingly aware of the looming challenge and are adjusting expectations accordingly. Current workers anticipate retiring at an average age of 66, five years later than the average age that current retirees exited the workforce (61).

Similarly, 12% of non-retirees actively have postponed their retirement plans, compared to only 9% of retirees who did the same, reflecting changing economic conditions and personal circumstances. The primary reasons for delayed retirement include the need to save more (58%), need to cover increased living expenses (47%), and the wish to stay physically and mentally active in old age (35%). 

Those anticipating a later retirement age are more likely to cite increased living expenses (51%), compared to 17% among current retirees who delayed their exit from the workforce.

Gold Star Planners look to their later years with optimism, while Retirement Rebels struggle

The survey also reveals stark differences between two distinct groups: the “Gold Star Planners” meticulously making retirement plans, and the “Retirement Rebels” who have none. The Gold Star Planners plan their expenses more than five years ahead of retirement, save more than 10% of their income for retirement, and are well-protected by insurance and pension products.

Comparing the Gold Star group to the Retirement Rebels, who have no insurance and pension protection, nor sufficient planning and saving around their later years, reveals interesting insights. Across Asia, Retired Gold Star planners are more likely to stay within their expected expenses (73% vs. 31%) and less likely to regret post-retirement financial decisions (14% vs. 40%).

The Gold Star group is far more likely to consult professional sources on retirement planning including financial institutions and independent advisers, and they are more they are more confident about their health and financial wellbeing in their later years.

Across all groups, the number one aspiration for retirement is the prospect of escaping the daily grind of work and relaxing (35%), followed by spending quality time with family and friends (22%), and enjoying life (18%). The greatest concerns associated with later years are health issues and physical decline (51%), factors that could put these dreams at risk.

Rainbow Pan, General Manager, Wealth & Pensions of Sun Life Hong Kong Limited, said: “With the ageing population and the high cost of living in Hong Kong, inflation poses a significant challenge to retirees' financial security. By adopting the 'Three-Bucket Strategy', which divides retirement savings into short, medium, and long-term allocations, individuals can better address the financial needs of different stages of retirement. Additionally, individuals should utilize retirement calculators, and consult with financial advisors when necessary to develop a comprehensive retirement plan."

David Broom, Chief Client and Distribution Officer of Sun Life Asia said: “Ensuring the wellbeing of our growing senior population is a shared challenge in our communities. While health is the most important pillar, it is also inextricably tied to economic security, productive work, strong family and social connections in the community. We have a unique opportunity to redefine what a secure and healthy retirement looks like and that means empowering people to approach their post-career years confidently with proactive plan for their finances.”

ENDS

Notes to Editors

• The findings in this survey were analysed and established through a total of 3,552 interviews conducted online in July 2024 across mainland China, Hong Kong SAR, Indonesia, Malaysia, the Philippines, Singapore, and Vietnam. Majority of respondents were drawn from middle to high income backgrounds, with some representation from lower income bands, with a minimum age of 30.
• Note to editors: All figures in Canadian dollars.
• The executive summary is available here 
• ¹ Source: Asia Development Bank: https://www.adb.org/whatwe-do/topics/social-development/aging-asia

About Sun Life

Sun Life is a leading international financial services organization providing asset management, wealth, insurance and health solutions to individual and institutional clients. Sun Life has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of June 30, 2024, Sun Life had total assets under management of $1.46 trillion. 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.

Media Relations Contact:

Iris Ng

Account Director, Sandpiper

T: +85298383501

Iris.ng@sandpipercomms.com

Becky Marshall   

Director, Communications, Sun Life Asia      

T: +8526170312

Becky.marshall@sunlife.com