Close to one-third of Hong Kong people said their financial priority at present is to save for retirement, according to a new survey commissioned by Manulife. The research also revealed that in addition to maintaining good health and current living standards, attaining "financial freedom" is one of the top priorities for an ideal retirement.
Manulife surveyed 1,034 Hongkongers to learn more about their plans and preparations for retirement, as well as their savings priorities and concerns. The survey, conducted between June and July 2021, found the average target retirement age is 62, but only 41% of respondents are confident of retiring by their desired age. The majority of respondents fear for their health and finances upon retirement.
“When it comes to retirement, people know what they want, but worry they might not get there,” said Manulife Hong Kong chief product officer and head of health Wilton Kee. “On one hand, Hong Kong people look forward to their retirement – many have a clear vision of what the ideal retirement life entails. On the other, people also worry about worsening health conditions and having insufficient savings. Three in five are unsure whether they can retire at an age they desire.”
Unsurprisingly, respondents who have already commenced their retirement planning tend to be more confident in retirement going according to plan, as compared to those who have not started. Over half (58%) of respondents who have started retirement planning are positive about retiring by their target age, compared to only 29% for those who have not started retirement planning.
More than half expect passive income in their retirement
Defined as a regular income that requires minimal effort to maintain, passive income is often perceived as a key avenue to achieving financial freedom. The survey revealed that more than half (53%) of respondents are aware of the term “passive income”, with younger people (aged 18-34) being most aware (71%).
Over half (54%) of respondents believe they will have passive income when they retire. Among those who are expecting passive income in their retirement, high dividend stocks (60%), annuities (40%), income funds (39%) and rental income from property investments (38%) are most selected as sources of income. These respondents generally believe their passive income will be able to cover around half (45%) of their total retirement expenses on average.
“Acquiring passive income is key to sustaining a desirable life during retirement. Planning ahead to secure various sources of funds will enable retirees to maintain pre-retirement living standards, cover health costs or unexpected expenditure, and even travel and enjoy life without being stressed about money,” said Mr Kee.
When selecting the top 3 elements for an ideal retirement, respondents prioritized maintaining good health conditions (72%), keeping current living standard (44%), followed by attaining financial freedom with passive income (40%). On the flipside, when asked about worries, respondents indicated deteriorating health (54%) and not saving enough upon retirement (39%) as their top concerns. These results corroborate with the rest of the findings.