Enjoy financial freedom when you retire
Many of us hope to lead a life of leisure when we retire, with more time to travel the world, spend with loved ones, and tick items off our bucket list! However, retirement can be expensive. With more and more people in Hong Kong living longer and more active lives, it’s more important than ever to plan ahead.
Where to begin
Firstly, start by figuring out where you stand on a few key factors:
Do you hope to maintain the same lifestyle when you retire? If you plan to be more or less extravagant, you need to take this into account when you’re planning for the future, and save accordingly. According to the 2015 United Nations population estimates, Hong Kong’s life expectancy (for both sexes combined) is 83.7 years *. Hong Kong citizens enjoy longer lives than most other countries in the world – a blessing, but one that can push costs higher. Your retirement savings or investment portfolio may have to last for 25-30 years.
Do you have any familial health risks or pre-existing conditions? As you age, it’s likely you’ll run into different health issues and problems – hopefully none of them are serious. However, it’s best to always be prepared for the worst. You’ll also struggle to gain approval for new medical insurance plans as you get older, so consider enrolling in one now. Although your premiums may increase as the years pass by, many plans offer you guaranteed renewal into retirement, saving you stress.
Many people may still be supporting elderly or young relatives when they retire, including parents and education-age dependents. If this is true for you, include this in your plan.
Don’t treat your retirement nest egg as a source of emergency funds – hold back an additional portion of your earnings for unexpected and emergency expenses instead. For more information on how to be a savvy saver, see IEC’s guide on saving for the future. It’s also a good idea to wrap up all loose ends, so you know that your family will be provided for in the future. You can do this by specifying an estate and asset distribution plan. Finally, don’t forget about inflation; in the future all spending and living costs will be higher than they are today. Bear this in mind!
What to do next
Once you’ve formed an idea of what your retirement situation will look like, craft a concrete plan! Lock down medical insurance and plans for all of your assets, and figure out how much money you need to be saving today to secure a leisurely tomorrow. For this, we can help – try using the IEC Retirement Planner to see a detailed breakdown of your current situation, and advice on how to get to where you want to be.