A whopping 85 per cent of people across nine countries cited Financial Insecurities as a primary factor for their plans to continue working after retirement. In comparison, 51 per cent of respondents said they are not considering quitting work after retirement for other reasons, an international survey by the HSBC Bank revealed.
The inaugural “’Quality of Life”’ report, released on September 18 by HSBC, showed a huge “gap of 71 per cent” between actual savings and what is needed for retirement.
The survey sought to understand the relationship between wealth and quality of life or how to balance financial security and quality of life. A total of 2,250 people aged 25-69 in the US, the UK, Mexico, the UAE, India, China, Hongkong, Singapore, and Malaysia participated in the study between March 30 and April 9, 2023.
In Hong Kong, people believe they would need a $1.1 million corpus for a comfortable lifestyle. In China, it is $929,000; in Malaysia, $829,000; and in India, $302,000. For 42 per cent and 40 per cent of the respondents, inflation and healthcare costs, respectively, were a significant concern.
In a press release, Sandeep Batra, head of wealth and personal banking at HSBC India, said: “Poor financial management can significantly diminish the quality of one’s retirement years. Our research underscores the critical role of goal planning and its impact on personal well-being. By prioritising money management and accessing appropriate financial guidance and products, individuals can work towards achieving their financial aspirations, including retirement.”
The study explored the relationship between physical and mental health, financial fitness, life’s objectives, the role of financial planning and preparedness, and retirement. The study was divided into five parts: What is the quality of life? Wealth and health, retirement outlook, relocation sentiment, and legacy planning and investment.
On average, millennials want to retire seven years earlier than the boomers and around 58 per cent of surveyed wish to create wealth for financial security. One in four people plans to relocate to another place after retirement for a better life. Also, around 20 per cent are unsure about how to do legacy planning, and less than half of the respondents have written a Will.
On Quality Of Life:
Physical wellness was rated the topmost factor for a quality life, followed by mental and financial fitness. According to the study, the common priorities across geographies are physical health, mental health, spending time with friends and family, and income stability. On average, people gave 64 out of 100 points to physical health, mental wellness, and financial fitness as a factor for good quality of life.
Across generations and geographies, these aspects remained the top considerations. Millennials (age 25-39) gave 60 per cent, Gen X (age 40-54) 64 per cent, and Boomers (age 55-69) 65 per cent. Similarly, Asians and non-Asians gave 63 per cent to these factors over others, including emotional and spiritual wellness, material success, and community engagement.
Boomers focus primarily on health, whereas millennials value “freedom, work-life balance, and education”. On the other hand, Gen X values travel and is “starting to think about retirement”.
The finding also shows that while boomers plan to protect their wealth, younger generations want to generate passive income to create wealth. Spending time with family and friends and travelling is the goal across generations in the next 5-10 years. Also, people in developed countries look to generate secondary sources of income as they currently depend on their salaries compared to emerging markets, where people have more diversified income sources.
On Wealth And Health:
The study validates the notion that financial fitness brings peace of mind. The report mentions a high correlation between “physical and mental wellness” and “financial and mental wellness”. It shows that investing early and better retirement planning contributes to peace of mind.
The quality of life ranked highest on the index at 75; however, developed markets like the US, the UK, Singapore, and Hong Kong scored lower on quality of life.
Millennials and Gen X associate retirement with financial freedom, while boomers associate it with health, family, and travel. Millennials are the most concerned about retirement, at 37 per cent, compared to 31 per cent of Gen X and 18 per cent of boomers.
The study shows that the top concerns for retirement across generations are the decline of physical health, inflation, healthcare costs, the need to save more money, and cognitive decline. Interestingly, people across geographies want to retire earlier than the formal retirement age, while 51 per cent plan to continue working past their retirement age.
Millennials’ desire to relocate is higher, mainly in Malaysia, the UAE, and India. For millennials, professional development is also one of the top reasons for relocation.
On Investment And Legacy Planning:
People across generations want to invest in alternative investment products. The environmental, social, and governance (ESG) segment is gaining interest, mainly in emerging markets.
For each new generation, the investment age is reducing. Today, those in the Gen Z group invest at 23 compared to boomers who start at 33. On succession planning, 20 per cent of people across generations have yet to do any legacy planning, and 44 per cent of people said that they have either executed a Will or have a succession plan in place.