Let's start with the good news. Advances in health care and economic development have improved living standards and pulled millions of people out of poverty. As a result, we are all living better and longer than our parents or grandparents.
But the good news comes with a challenge. A longer life span means more years in retirement, and that requires more money from pensions and personal savings to fund those years. After years of economic uncertainty, many institutions and individuals today face a wide gap between what they have and what they will need to meet their obligations.
How do we close that funding gap? How do we pay for our additional 'golden years?' To start, we have to identify the real issues we are confronting.
Increasing longevity, combined with lower birth rates, isn't just a Western phenomenon - it is true throughout Hong Kong and mainland China too. According to the latest Hong Kong census figures, the median age rose from 36.7 in 2001 to 39.6 in 2006 and, further, to 41.7 last year. While the population aged 65 or above exceeded 900,000 last year, it is anticipated that this number will reach more than 2.1million in 20 years' time. And in mainland China, about one in four people will be over 65 by 2050, forecasts say. Further, in Hong Kong, the overall labour force participation rate dropped from 61.4per cent in 2000 to 59.6per cent in 2010.
All of this will have a tangible impact not just on our later years but also on our way of life, our focus on family and on the ways we save. It may mean that expenditures typically borne by families, such as funding children's education or buying property, will be reevaluated as parents and grandparents hold onto savings to pay for their lasting needs.
Savings and investment patterns will need to change; pension plans and social safety nets are strained by fewer workers paying in and more retirees collecting payments; and labour costs and capital investment trends will change as workers in countries with once plentiful labour become more scarce and expensive.