Cost of buying a home is main obstacle to retirement saving

Cost of buying a home is biggest obstacle for HK people to putting retirement cash away

PUBLISHED : Thursday, 21 February, 2013, 12:00am
UPDATED : Thursday, 21 February, 2013, 6:07am

Buying a flat has become the biggest obstacle to retirement saving for Hong Kong people, a survey by HSBC has found.

While the average pension pot is expected to cover only 11 years, those who do not have enough funds may be at risk of living six years beyond their retirement savings.

The survey on retirement savings, conducted in the third quarter of last year, polled more than 15,000 people in 15 countries and territories.

On average, Hong Kong respondents aspired to have HK$436,000 a year as the comfortable income in retirement, against HK$524,000 for current income. But more than half said they were not preparing enough for their retirement.

Asian respondents on average said they needed about HK$320,000 a year for a comfortable retirement.

With property prices rising, down payments have become a burden for homebuyers. Two in five Hong Kong respondents said buying a home or paying a mortgage was derailing their effort to save money, as were paying for children's education, pay cuts and the economic downturn.

Extrapolations from the 2011 census suggest 30 per cent of Hong Kong's population will be over 65 years old by 2041.

Diana Cesar, the head of retail banking and wealth management at HSBC Hong Kong, said the ageing population was an increasing challenge.

"Shifting economic and social trends require Hong Kong people to plan better for the future," she said. "The Mandatory Provident Fund is only one of the ways to prepare for retirement."

Cesar said that as part of long-term planning, there were other tools for better decisions, such as seeking advice from financial advisers.

On average, Hong Kong respondents believe the age of 38 is the latest people can start financial planning for retirement.

Hong Kong Mortgage Corporation has been offering reverse mortgage programmes to people aged 55 or above since 2011. Until now, only six banks are participating in the programme, including Bank of China (Hong Kong) and Bank of East Asia.

Cesar said: "HSBC is reviewing whether to join the programme."