Nearly 30% of respondents have not budgeted for their medical expenditure after retirement
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.
While they find tax deductible products appealing, half of respondents are “all thought and no action”
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:
- 70% of respondents agree that TVC and QDAP can enhance retirement protection.
- 65% of respondents agree that the launch of TVC and QDAP has encouraged them to start preparing for retirement earlier.
- 68% of respondents agree that the launch of VHIS has encouraged them to prepare for medical expenses.
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 11th 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.