Study: HK residents need $4.6mn+ in retirement savings to cover standard of living

Latest reports find that without social welfare support, Hong Kong residents need at least 4.6 million dollars in retirement savings to maintain basic living expenses after retirement.

Women require even more savings -- around 800,000 dollars extra -- due to longer life expectancy.

Using data from the Census and Statistics Department and the Consumer Council, and based on prices as of March this year, the Hong Kong Retirement Schemes Association estimates a baseline retirement living cost of 20,000 dollars per month.

A man retiring at age 65, with an average life expectancy of 86, would need around 4.6 million dollars in savings.

For the 10% of men who live to 97, the amount rises to 6.6 million dollars.

For women, whose average life expectancy is 90, will need retirement savings of about 5.4 million dollars.

Those planning to live to 100 would need 7.1 million dollars.

Housing remains the largest expense, accounting for roughly 8,000 dollars per month.

WILLIAM CHOW, Head of Retirement HK & Macau, WTW: “We found that the biggest factor that leads to the variation to the expenses will be the accommodation style. Another one is the household structure. So whether we have financial dependence linked to the retiree, so that's the second factor.”

The estimates do not take into account whether the retirees have other assets or lower-cost retirement options, such as retiring in mainland China.

It also says the current 5% employers and employees Mandatory Provident Fund contribution is insufficient for

providing adequate retirement protection and suggests stronger incentives for higher contributions.

They include separating the current combined 60,000-dollar tax-deductible cap for Voluntary MPF Contributions and Qualifying Deferred Annuity Policies into two independent tax deduction limits.

The association also called for a larger issuance of silver bonds and infrastructure bonds to help protect retirees against the long-term impact of inflation.

JANET LI, Chairperson, Executive Committee, HK Retirement Schemes Association: “We also call for financial product and related social product innovation that will help to give more options for retirees as they go into the retired stage. For example, utilise their income stream and other ways to get health care services, medical services as well as to enhance their social life and contribute back to the society.”