Wealth Solutions & Wealth Planning

HSBC's Quality of Life Report Reveals Global Trend of Working Beyond Retirement Age

The HSBC Quality of Life Report, which surveyed individuals across nine different markets, has shed light on a global phenomenon: an increasing number of people are planning to continue working beyond the traditional retirement age. While many aspire to retire earlier than previous generations, the harsh financial realities of today's world are forcing them to reconsider.

The report, which examined the perspectives of 2,250 affluent and high net worth individuals worldwide, uncovered a notable trend. More than half of these respondents are preparing to work beyond the age traditionally associated with retirement in order to safeguard their financial well-being.

The study, spanning nine diverse markets, indicated that younger generations have ambitions of retiring earlier than their predecessors. However, the implications of extended lifespans and economic challenges have led to 85% of those surveyed expressing financial concerns as the primary reason for considering post-retirement employment in some form.

These financial worries encompass the need for financial security, the desire for a comfortable lifestyle, and the obligation to meet financial commitments. Additionally, a significant portion of respondents mentioned non-financial reasons, such as staying active and engaged (70%) or acquiring new skills and knowledge (51%).

Despite most respondents having already begun saving for retirement, over half of them feel financially unprepared for this stage of life. On average, there exists a substantial gap of 71% between the actual retirement savings and the amount required for a comfortable retirement. In Hong Kong, individuals anticipate needing $1.1 million for a comfortable retirement, followed closely by Singapore's $936,000, mainland China's $929,000, and Malaysia's $829,000. This gap is exacerbated by the rising cost of living, with inflation being a significant concern in developed markets like the United States, Singapore, and Hong Kong. Notably, respondents in Singapore and Hong Kong expressed greater concern about healthcare costs than those in other surveyed markets.

The findings from this study highlight the need for individuals, including high net worth individuals, to reconsider their retirement expectations and when they can begin drawing from their long-term savings. Changing demographics, declining birthrates, and reduced investment returns in recent years have forced people to rethink the timing of retirement. This issue holds political sensitivity in certain countries, such as France, where government efforts to increase the retirement age have sparked public protests. In the United States, the tax-funded social security system has long been regarded as a politically charged issue.

Lavanya Chari, HSBC's global head of Investments and Wealth Solutions, Global Private Banking and Wealth, stressed the importance of raising awareness about financial planning solutions that address these concerns. Chari recommended early contributions to pension plans and investing in diversified portfolios to counteract inflation. She emphasized the value of consulting experts who can tailor personalized plans to meet individuals' needs.

The Quality of Life Index, on which this report is based, assesses three critical dimensions: physical wellness, mental wellness, and financial fitness. These dimensions are inherently interconnected, with those rating themselves as physically or financially fit being more likely to score above average for mental wellness.

The survey delved into the financial goals, life decisions, and expectations of individuals aiming to secure their quality of life in the future. Among other findings, the report revealed that Millennials aspire to retire seven years earlier than the Baby Boomer generation.

Economic uncertainty is also having a notable impact, with 58% of global respondents expressing a desire to accumulate wealth for financial security in the present and near future. Furthermore, one in four individuals plans to relocate to achieve a better quality of life, a trend particularly pronounced among Millennials and those from emerging markets.

However, the report highlighted a concerning statistic: less than half of respondents have drafted a will, and 20% are unsure how to initiate legacy planning.

The study encompassed nine countries, including mainland China, Hong Kong, India, Malaysia, Mexico, Singapore, the United Arab Emirates, the UK, and the US. Of the respondents, 79% were classified as "mass affluent" (with investible assets ranging from $100,000 to $2 million), 20% as "emerging affluent" (with investible assets ranging from $25,000 to $100,000), and 1% as "high net worth and above" (with investible assets exceeding $2 million).

Various banks and wealth management firms have also examined attitudes toward retirement and saving, often revealing challenging realities. For example, a study by St James's Place Asia last year found that 58% of Singaporeans and Hongkongers between the ages of 45 and 64 had not planned for their retirement. Moreover, 64% had not accounted for inflation in their financial planning. This report coincided with the retirement age in Singapore being raised from 62 to 63 as of July 2022, with plans to gradually increase it to 65 by 2030. Hong Kong, meanwhile, maintains an official retirement age of 65 years.