The 11th AIA Desired Retirement Tracker

AIA Hong Kong today announced the results of the “11^th AIA Desired Retirement Tracker” (the “Survey”) with the following key findings:

Ms. Elaine Lau, Chief Corporate Solutions Officer of AIA Hong Kong and Macau, remarked, “Hong Kong citizens have a laissez-faire attitude towards retirement saving, and the situation is getting worse. The Survey reveals several misconceptions regarding retirement planning that have led to people. They are saving too little and too late, resulting in a record-high retirement reserve shortfall of over HK$2 million among nearly 70% of respondents. In addition, they have not prepared for post-retirement medical expenses, meaning their overall retirement plan would be affected if they are forced to draw from their retirement reserves prematurely due to health issues. Moreover, following the government's launch of the tax deductions that encourage citizens to prepare for retirement and medical needs last year, while people in Hong Kong find such products appealing, yet as high as half of respondents are ‘all thought and no action', missing out on the opportunity to enhance their retirement and medical protection.”  

Ms. Elaine Lau, added, “We must correct these misconceptions as quickly as possible and remind ourselves to save more and start earlier. Starting to save early allows us to optimise returns by leveraging the compound effect over a long period of time. As 2019/20 Tax Year will end on 31 March 2020, it is time to turn thoughts into actions. We may actively consider starting our retirement planning with the tax deductible products as they offer great opportunities not only for retirement and medical protection enhancement but also for tax saving, helping us live Healthier, Longer, Better Lives.”

The Survey reveals that respondents desire to have HK$3.39 million (median) in retirement savings and, on average, consider 61 to be the desired retirement age. After applying independent actuarial calculations¹ on each respondent, 66% of respondents would have insufficient retirement reserves to meet the living expenses required for their desired retirement and would face a shortfall of HK$2.01 million (median), a record-high among all previous Surveys. These “Underachievers” will face two choices: either to postpone their retirement by 10 years until the age of 71 or reduce their monthly living expenses by HK$8,696 (median).

Saving too little, too late, an alarming phenomenon, is common among respondents:

In recent years, the rise in medical costs has outpaced the increase in the overall consumer price index. As the Hong Kong population continues to live longer, nearly one in every three people will be an elderly person by 2038², meaning the city's public healthcare system would face an increasing pressure while the people in Hong Kong would shoulder a greater financial burden due to medical expenses after retirement. Yet the Survey reveals that 26% of respondents have not budgeted or have no idea how much to budget for their medical expenditure after retirement. Among those respondents who claim they have taken medical costs into account, 59% have not budgeted or have no idea how much to budget for medical emergencies (such as stroke, cancer, heart disease, etc.) in their retirement reserves. These critical illnesses are associated with longer term and more expensive treatments, which may gradually eat away one's retirement reserves.

The tax deductible products, including TVC, QDAP and VHIS, were launched in 2019. The Survey reveals that around half of respondents agree that the product series is appealing, with 47%, 44% and 50% showing interest in the TVC, QDAP and VHIS respectively. Respondents also have a positive view of the tax deductible products:

Despite the appeal of the tax deductible products, only about 10% of respondents have made related purchases. As high as half of all respondents are “all thought and no action” - 45%, 51% and 33% of respondents consider buying TVC, QDAP and VHIS respectively but have yet to take any action. In fact, the majority of respondents who have purchased the tax deductible products are of older age (aged 39-43), indicating that the younger age group prefers taking a wait-and-see attitude, thus missing out on the opportunity to accumulate retirement reserves by saving and investing earlier.

The 11^th AIA Desired Retirement Tracker Survey was conducted via online questionnaires and face-to-face interviews from 11 October to 21 November 2019 to examine the goals and views of Hong Kong's working population regarding their desired retirement as well as the possibility of achieving their retirement goals. The 1,035 respondents from the city's working population were between the ages of 18 and 65, and possessed at least one MPF account. 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.  

About AIA Hong Kong and AIA Macau
AIA Hong Kong and AIA Macau are subsidiaries of AIA Group Limited. AIA Group Limited established its operations in Hong Kong in 1931. To date, we have over 18,000 AIA financial planners¹, as well as an extensive network of brokerage and bancassurance partners. We serve over 3 million customers², offering them a wide selection of professional services and products ranging from individual life, group life, accident, medical and health, mandatory provident fund, personal lines insurance to investment-linked products with numerous investment options. We are also dedicated to providing superb product solutions to meet the financial needs of high net worth customers.