Over half of people in Hong Kong expect to work after retirement

Research from Manulife Investment Management has revealed that on average, 57% of people in Hong Kong expect they will have to work after retirement.

Reasons vary among the different generations, households, and genders - from family obligations, desired lifestyles, and financial status, reflecting the diverse nature of people's thinking about retirement. 

The findings are part of Manulife Investment Management's Diverse Asia retirement series, which looks at the challenges and opportunities facing Asia's ageing populations and how they are woven into the demographic profiles and socioeconomic foundations in the region.

Manulife Investment Management commissioned NielsenIQ to conduct an online survey of 2,000 people from Hong Kong, Taiwan, Indonesia, and Malaysia - 500 people from each market - who are aged 20 to 60 between 25 August and 6 September 2022.

The research aimed to assess people's retirement readiness and aspirations, including savings and investments, and lifestyles and family issues they consider when planning for retirement.

For Gen Z, Gen X and Baby boomers, their primary reasons for working after retirement are for their personal well-being. Meanwhile, Millennials place more emphasis on family. One common reason they have though is they do not feel they will have enough money to truly retire.

Table 1: Likelihood and reasons for working after retirement

Interestingly, the younger generations have started saving for retirement at an earlier age (Gen Z at 21 years old and Millennials at 28 years old) whereas the older generations started much later (Gen X at 39 years old and Baby boomers at 44 years old).

For most people in Hong Kong, maintaining the same standard of living after retirement appears to be a challenge, especially with the changing demographic and family structure in the city. 

As of 2021, 50% of older persons (aged 65 and above) live with their children.

However, Hong Kong's declining birth rate, and subsequently smaller family sizes, continue to threaten the foundations of family care. Moreover, high housing and daily living costs are contributing to a worsening financial situation for older adults. It also undermines the younger generation's financial ability to care for their parents.

This may explain why on average a quarter of Hong Kong people said wanting to support their family financially as a key reason for working after retirement. The next generations may not only need to provide support for their retired parents, they may also need to prepare for diminished upstream familial support when they retire.

In response to these new familial and sociocultural realities, Hong Kong's older population may be forced to modify their long-standing filial care expectations and continue working to pay for their upkeep. Over the past decade, the number of working older persons has more than doubled (up by 136.6%), mainly due to the surge in working older persons in the 65 to 74 age category.

Globally, women aged 65 or older received 26% less income from pensions than men on average, according to an OECD report from 2021.

A significant factor that frequently impedes women's accumulation of retirement wealth is the stop-start nature of their working lives.

Typically, working age participants can expect to experience a gradual increase in income throughout their working lives. For women though, forming a family and having children may create career interruptions that have lifelong implications for their financial well-being.

In Hong Kong, approximately 65% of women who ever married (includes now married, widowed, divorced/separated) are active in the labour market, while up to 96% of their male counterparts are still employed or actively seeking work.

In addition, women's labour participation and pay rates often lag men. In Hong Kong, labour force participation rate for women is 54% compared with 82% for men;  women in this market also earn 27% less than men.

As its study noted, having children frequently means women must put their career on hold - often indefinitely. They also tend to earn a reduced income after giving birth, resulting in lower lifetime earnings and a slower accumulation of pension benefits.4 

Coupled with the longer life expectancy of women, it may come as no surprise that their top financial objectives are wealth accumulation (56%), retirement (49%), and personal consumption (42%).

The good news is that technology can help women and men better plan and manage their retirement savings. Proprietary data from Manulife Investment Management revealed that more women than men use digital platforms to access investment information and to invest.