Hong Kong has the lowest birth rate globally. Should we be self-sufficient rather than relying on our children?
Recently, I watched a TV programme interviewing a 65-year-old woman who had to take care of her 90-year-old mother. The story deeply impressed upon me the importance of ‘raising children to support our old age’. Unfortunately, times have changed and the desire for childbirth in Hong Kong continues to decline. In April, the United Nations Population Fund released a report on the world’s population, indicating that Hong Kong has the lowest birth rate worldwide, with only 0.8 children born per woman1, and many families have only one child. Thus, relying on our children to support our future retirement life means burdening them. As parents, can we bear to let this happen? Moreover, some young people plan to live abroad, making it even harder to financially support their parents in Hong Kong.
As a parent of two aged 19 and 23, I have dedicated myself to providing for them both financially and emotionally, but I do not expect the same return from them in the future. I am satisfied knowing that I can manage my retirement expenses, and that they can take care of themselves without my financial support.
Life expectancy continues to rise, and so do retirement expenses
While enjoying the improved living standards brought about by global developments, we also face the challenges posed by irreversible global trends. In addition to low birth rates, many governments around the world are struggling to cope with the impacts of ageing populations on their finances – and this problem is especially acute for Hong Kong.Compared to other places in the world, we have one of the highest life expectancies, with women outliving men. The latest figures show that Hong Kong women have an average age of 87.9 years and men 83.2 years2.
As we age, the likelihood of developing health issues increases. According to AXA’s claims records in 2021, the 41-60 age group accounted for 50% of total hospitalisation claims3, of which female claimants outnumbered male ones.
Backed by data from the Census and Statistics Department, which shows that we have more women than men in Hong Kong, women are more likely to take care of themselves in retirement4. In short, both men and women are on their own in planning for their retirement lives and will have to bear all medical expenses without the help of proper medical protection.
As mentioned earlier, life expectancy has increased while the number of working years has not. This means there is a need for 40 years of financial support after retirement with an unchanged savings period. It is necessary for us to know how to convert savings into stable and long-term retirement income.
Make the most of immediate annuities to create a steady stream of income
A survey conducted by AXA on immediate annuities5 reveals that 61% of Hong Kong residents aged between 50 and 85 are worried that their savings will not be able to offset the expenses arising from longevity, and only 37% are confident that their current retirement savings are sufficient to meet their future retirement expenses. These numbers depict people’s sense of financial insecurity during retirement, particularly in the face of longevity and uncertainty. For this reason, annuities become a crucial part of retirement savings alongside long-term investment arrangements, as they provide a steady and continuous stream of cash flow.
This is also why I began preparing for my retirement life years ago, with annuities included in my retirement savings portfolio. Annuities are usually more stable as they offer a guarantee of principal, which can reduce the impact of financial turmoil, and an opportunity for better performances in the medium to long term. A balanced wealth portfolio with annuities, therefore, can effectively generate lifelong and guaranteed returns.
Further, there are immediate and deferred annuities. Immediate annuities can provide monthly income shortly after the policy comes into effect and are more suitable for those who are about to retire or have already retired. AXA JoyAhead Immediate Annuity Plan, for example, starts guaranteed lifelong annuity payment from the first policy monthiversary after policy issuance. In addition to monthly annuity payment, it offers a terminal dividend that can be withdrawn after locked in, allowing you to enjoy higher potential returns. To retire without worries, it is recommended that you act now to create a continuous and stable cash flow for the future.
1. United Nations Population Fund - State of World Population 2023
2. Census and Statistics Department, 2021
3. Internal database from AXA Claims Department, 2021
4. Census and Statistics Department, 2022
5. AXA Immediate Annuity Survey, conducted by market research firm YouGov in April 2023, with a total of 505 interviewees aged between 50 and 85
The above content is provided by Alvin Lam, U.S. Certified Money Coach (CMC®), whose opinions do not represent the position of AXA.
Terms and conditions apply to AXA JoyAhead Immediate Annuity Plan. Please refer to the relevant product brochure and provision for details.
No warranty or responsibility is assumed by AXA Hong Kong and our related or holding companies regarding non-infringement, security, accuracy, completeness, adequacy, reasonableness, fitness for a purpose, or free from computer viruses in connection with the information and materials provided. AXA Hong Kong and our related companies and holding companies do not accept any liability for any loss, damage, cost or other expense, whether wholly or partially, directly or indirectly, arising from any error, inaccuracy or omission of the information and materials to the extent that such liability is not excluded by law.
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