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November 10, 2015

Kids? Add 11 years to your working life

The Standard - Latest NewsToday, 11:13 AM

About 30 percent of Hong Kong's workforce will need to delay their retirement by almost 11 years, according to an AIA study.

AIA also developed a retirement quotient which showed that residents of Southern District had the best savings attitude in the territory with those in Sham Shui Po the worst.

A total of 1,110 respondents with Mandatory Provident Fund accounts were polled through online surveys and face-to-face interviews in August.

It found three problematic financial attitudes that put retirement plans at risk: parents devoting too much time and money to their children to think about themselves; the post-90s lacking in financial knowledge and motivation to manage their finances; and loans becoming increasingly popular to propagate instant gratification over a future planning mindset.

Some 76 percent of parents said they had no time to manage their finances, were far too preoccupied with taking care of their children and devoting their earnings toward them.

Eighty percent said they ignored their own retirement saving needs to provide for their children, with 87 percent saying that their expenditure on their children's education and activities exceed their retirement savings.

Parent respondents were found to prefer borrowing money to sustain daily living over reducing the earnings spent on extra-curricular activities for their children.

Sixty percent of parents also did not seek help from financial advisers, pointing to a commonplace distrust of financial institutions.

AIA MPF chief executive Stephen Fung Yu- kei said he understood the hardships of parenthood, but urged parents not to neglect their own retirement savings.

"Sixty-five may be the average retirement age but if current saving habits will delay retirement by 11 years, simple maths will make the retirement age 76," he said.

Fung urged parents to review what they spend on their children, to determine whether they really needed it, pointing that "there is want, and then there is need."

Nearly 30 percent of post-90s youth believed that their quality of life would improve at retirement but only 41 percent had clear savings or investment plans.

AIA MPF developed the retirement quotient, or RQ, a figure that measures a variety of factors like whether the individual has retirement savings plans, financial knowledge, or trust in organizations. Scores ranged from 10-100, with 75 or higher being considered a high RQ.

Those with high RQ scores among the post- 90s cited their parents as having taught them the importance of saving.

"If parents are not good savers, the tendency will pass to their children," said Chou Kee-lee, professor and head of the department of Asian and policy studies at the Hong Kong Institute of Education.

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