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15 Jan 2021

In the Chinese culture, the older generation tends to rely on their children to support them after they retire. However, nowadays Hong Kong people life expectancy has increased to older than 80 years old. You can imagine the challenges your children will bear if you just solely depend on them on economic support. 

1. Older workers’ retirement readiness isn’t sufficient 

Fidelity’s Global Retirement Survey1 launched in six developed regions, including Hong Kong, Japan, the United Kingdom, Germany, Canada and the United States. Based on the methodology and surveyed data, each region was assigned a Retirement Readiness Score ranging from 0 to 150+. The higher the score, the better prepared they are to cover their estimated expenses in retirement. 

The median Retirement Readiness Score of Hong Kong was 75. It indicates Hong Kong workers are only on track to cover 75% of estimated required expenses after they retire. Without any action to enhance retirement preparedness Hongkongers may not be able to maintain their pre-retirement lifestyle after retiring. 

The survey reveals that the older generation in Hong Kong was in relatively weak position in their retirement readiness. The median score of this group was only 63. A rather late start to retirement planning, as well as an excessively conservative asset allocation, may have contributed to the lower scores. This shows that the older generation faces the greatest challenge in achieving retirement readiness and they may need to work longer and retire later.

To avoid facing the resources shortage after you retire, workers at all ages should consider saving more, if possible. But how much should you be saving?

2. Saving 20% of income for retirement

Fidelity's Retirement Savings Guidelines2 suggest that Hong Kongers should save 20% of pre-tax pre-retirement income starting from 25 years old. Fidelity estimates that you need to have 12 times pre-retirement income savings by age 65. That 12 times goal may seem ambitious.But you have many years to achieve it. It is recommended to have at least 2 times pre-retirement income by ag 30, 5 times by age 40, 8 times by age 50 and 11 times by age 60.   

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3. 1% Power of Small Amounts

If you have difficulty saving 20% right now, try to commit to an additional 1% contribution into your workplace pensions scheme. 1% of your income sounds small but the benefits of compounding over 20 or 30 years could may make a significant difference in the size of your pension pot when you retire. 

Want to know how much of an impact a 1% increase in savings or workplace pension can make for you? Use our interactive calculator. See how a small change can make a big difference.

Indeed, 1% is just a start. The more you can save, the better. Whether it's 1%, 3% or 5% extra, the additional money saved today could make a big difference when it comes to helping you achieve the retirement you want.


1 The Fidelity Global Retirement Survey was conducted online in 2019, with responses from nearly 14,000 workers across the six regions.

2 Fidelity Retirement Savings Guidelines is based on four key metrics - savings milestones, savings rate, income replacement rate and probable sustainable withdrawal rate. Fidelity Retirement Savings Guidelines suggest that people in Hong Kong should save 12 times their annual income by the age of 65 and save at least 20% of pre-tax income in order to maintain their current lifestyle in retirement. The Fidelity Retirement Savings Guidelines are for reference only and certain assumptions are applied.

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