Asian Millennials At Risk Of Anxious, Cash-Strapped Retirement - Manulife

Tom Burroughes

23 February 2017

A survey of 1,000 millennial investors across eight major Asian jurisdictions shows they are in danger of running out of money in retirement, even though many think they will have sufficient funds to rely on in old age.

The survey, conducted by Manulife, the Toronto-listed financial services group, found that despite widespread optimism about their retirement - with nine-out-of-ten (89 per cent) saying they expect to be able to maintain or improve their standard of living in retirement - nearly one-third (30 per cent) of millennial investors also expect to run out of money later on in life.

The survey was based on some 500 online interviews of investors in each of Hong Kong, China, Taiwan, Thailand, Singapore, Malaysia and the Philippines, and 500 face-to-face interviews in Indonesia.

"Asia's millennials are naturally optimistic about their retirement as many will have grown up in an era of unprecedented economic development. With that prosperity comes a longer and better quality of life - and with that, higher expectations of the future,” said Roy Gori, president and chief executive of Manulife Asia.

"But the economic model that underpins our current understanding of retirement is quickly changing. Young people today will need to start saving, and investing, sooner rather than later. Otherwise they face a retirement of anxiety, not adventure," he said.

Manulife said that a “common rule of thumb is to accumulate around 25 times the amount one expects to spend in the first year of retirement”. Yet the survey showed that, on average, millennial investors expect to accumulate just 8.2 times their annual income by the time they retire. While this figure was higher than the regional average of 7.5 times, millennial investors are still well short of the "25 times" benchmark.

Nearly four-in-ten millennials (38 per cent) expect to financially support both their parents and children at the same time - significantly constraining their ability to invest and prepare for life after work. In comparison, only 29 per cent of older investors expect to support their family in the same way.

Younger investors are slightly more concerned than generations past about the impact of health on their finances. Many millennials (39 per cent) expect healthcare to become too expensive during retirement, and more still (43 per cent) expect that their health will deteriorate to the point where they can no longer work. Despite these challenges, 71 per cent of millennials expect to work in retirement compared to only 66 per cent of older investors.