The price of a long life: Hongkongers may need US$910,000 to retire
Study urges more tax incentives for voluntary pension savings, while a lawmaker suggests retirees consider lower-cost living in the Greater Bay Area
Hong Kong’s exceptional longevity means some individual retirees may need as much as HK$7.1 million (US$910,000) to support themselves after leaving work, exposing a wide gap between retirement needs and actual pension savings, according to a new study.
The finding contrasts sharply with the average Mandatory Provident Fund (MPF) balance of HK$319,561 as of March, according to MPF Ratings. The compulsory pension scheme covers about 4.8 million members.
To plug the gap, the study urged the government to give more tax incentives to encourage contributions to the MPF voluntarily and to promote more financial products to address retirement needs.
At a monthly spending level of HK$20,000, the average MPF balance would last just 16 months, according to calculations by the South China Morning Post. Even if monthly spending were halved, it would be exhausted in about 32 months.
The study, jointly conducted by the Hong Kong Retirement Schemes Association (HKRSA) and pension consultant WTW, found that a woman retiring at 65 and living to 90 would need HK$5.4 million, rising to HK$7.1 million if she lived to 100.
A man retiring at 65 and living to 86 would need at least HK$4.6 million, rising to HK$6.6 million if he lived to 97.