Bringing you live news and features since 2006 

Asian millennials face critical retirement finance crunch, says survey

RELATED TOPICS​

Millennials in Asia are at substantial risk of a cash crunch during their later years, with many expecting to carry mortgage debt into retirement or even run out of money altogether, a survey reveals.

Millennial investors, surveyed as part of the Manulife Investor Sentiment Index (MISI), revealed very mixed expectations about the quality of their financial futures.
 
Despite widespread optimism about their retirement, with 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) also expect to run out of money later on in life.
 
Roy Gori, president and CEO of Manulife Asia, says: "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.
 
"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."
 
While no two investors will have the same retirement requirements, 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.
 
Michael Dommermuth, head of wealth and asset management, Asia for Manulife, says: "Millennials may have been led to feel a sense of optimism for an improved post-retirement living standard, which is potentially misplaced. Younger generations should plan strategically to begin accumulating wealth at early life stage."
  
Millennials acknowledge the challenges which threaten their financial security later in life. Nearly four in 10 (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.
 
"It's sobering to see how many investors, especially young people, recognise that there are risks to their retirement. Longer lifespans and later retirement will place increasing demands on investment funds, for which every investor should start planning ahead early for future protection," Dommermuth adds.
  
Many investors, including millennials, continue to seek financial security through real estate. Nearly half (45 per cent) of millennials who intend to purchase local property across Asia seek to generate rental income from it. However, their expectations of a return may not reflect the diverging fortunes of the real estate market within the region.
 
Dommermuth says: "Younger investors looking to address their retirement shortfall should reconsider their investments in the context of rapidly maturing – or already mature – real estate markets. While previous generations relied heavily on real estate for their retirement fund, economics and demographics mean that today's millennials need to take a different approach.
 
"Millennials whom invest in emerging Asia will likely fare better than those who buy a home in maturing Asia, where slowing growth and ageing populations can dampen real estate markets. They owe it to themselves to consider every option available to them in order to plan more effectively for their future."

Latest News

Saving and investing app, Moneybox, has doubled the number of ETFs available on the platform, in the light of ‘growing..
Global X ETFs has announced the appointment of Ryan O'Connor as its Chief Executive Officer effective as of April 8, 2024. ..
Value-driven structured credit investing firm, Angel Oak Capital Advisors, LLC, has announced the completed conversions of two of its mutual..
Confidence in the continuing strength of bitcoin and Ethereum is driving wider interest in altcoins and other digital assets, according..

Related Articles

Graham MacKenzie, Toronto Stock Exchange
The evolution of ETFs has been a multi-decade experience for Toronto Stock Exchange says Graham MacKenzie, managing director, Exchange Traded...
Frank Koudelka, State Street Global Services
ETF data provider and ETF Express data partner, Trackinsight, has published its Global ETF Survey 2024 Report: ‘50+ Charts on...
Cryptocurrencies
Matteo Greco, Research Analyst at Fineqia International writes that bitcoin (BTC) ended the week at approximately USD52,150, showing a notable...
US Distribution Awards trophies
The winners of the first US ETF Distribution Awards at the Exchange conference, hosted by ETF Express and sponsored by...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by