Retiring in Hong Kong: How to Avoid Outliving Your Retirement Fund
One of the biggest challenges in saving for a retirement fund is ensuring that you will not outlive it. When you outlive your fund, that means you no longer have the finances to fund your twilight years. That can become a problem when you are too old to go back to work and your physical body is no longer able to support your financial needs.
You have to understand that in Hong Kong, the ageing population is living longer than expected. According to the data from HKEP.com, the good health care system is to be thanked for that. The elderly are able to get medical treatment when they need it because the government set up an effective health care system. The public hospitals and medical professionals are at par with the private counterpart and cost significantly less.
This fact tells you that there is a high chance that you might outlive your retirement fund. So do not leave yourself to chance. You do not want the last few years of your life to be miserable just because you do not have the money to live a comfortable life.
Tips to make your retirement money outlive you
The thing is, it is not enough that you save based on a target amount. You have to learn how to manage it well. Fortunately, there are many ways that you can stretch your retirement fund so you can set it up to outlive you – and not the other way around.
Opt for public housing.
The government prioritises the elderly in the public housing program. Before you use your retirement savings to buy a great unit in the middle of the city – think about stretching that money a bit. Opt for public housing because it will cost you less. You want to conserve your finances for other important expenses like food and healthcare.
Apply for government benefits.
The government also provides substantial pension and benefits. For instance, CSB.gov provides information about the benefits that civil servants can get once they reach the average retirement age. There are various pension schemes like the Old Pension Scheme and New Pension Scheme. You have to know what you can receive from the government after all the years you worked in Hong Kong and given your income taxes.
This is the best defence that you have against mismanaging your retirement fund. Do your research to find out more about your pension and senior benefits so you can supplement your savings. You can visit Gov.hk for more resources. Some benefits you can receive are specific to your profession. Like what we discussed, civil service professionals have their own pension schemes. There is also a pension scheme for dependents known as the Widows and Orphans Pension Scheme and Surviving Spouses’ and Children’s Pensions Scheme. Of course, there are also retirement funds and benefits to be expected from private companies. This will vary so make sure you will find out what the company you are working for can offer you.
Start saving early.
Another tip that you can use to ensure that your retirement fund will outlive you is to save early. If you have yet to start, you need to do it immediately. This is not something that you should postpone. The longer you wait, the less you will have in your fund.
Keep your debts low.
Try not to share your limited funds with debt – especially if it is a high-interest debt like credit cards. Regulate your debts and make sure you pay them all off before you retire. Even if you have a huge amount of your retirement savings, this will be compromised if you have to pay off your debts. You might miscalculate because of the interest of your debt and that can eat up your retirement money.
Invest your money.
Finally, you have to learn how to invest. Put your money to work by making it earn for you through compound interest. Invest your money in shares, bonds, and mutual funds. There are so many ways to make your finances earn you money. You can continue earning from it so you have a steady stream of income even when you are already retired.
How to guarantee you will reach your retirement fund goal
If you really want to end up with enough money to finance your retirement, here are a couple of tips that you can follow.
- Have a clear picture of your retirement life. You will not really know your target for retirement if you do not know how you will live it. Will you travel abroad? Or will you continue working in retirement? Do you have plans to live with your children? These are important things that you need to consider to help you determine your retirement fund target.
- Consider your health care needs. While the public healthcare system in Hong Kong is great, you may want to consider stocking up on health care funds. If you have a history of ailments in the family, you need to research how much the treatments will cost you when you get older. You want to have the finances to get the best care when you retire.
- Maximise your retirement savings. If your employer offers a plan, grab it. You can also choose to save on the side. As mentioned, you can invest your money to make it grow through compound interest.
You deserve to live a great senior life and your retirement fund will help you accomplish that. Make sure you will not compromise your twilight years just because you did not prepare for it while you were young.
She is a Singapore Management University 2nd year undergraduate specialising in Strategic Management. From Tampa, Florida, she possesses an International Baccalaureate diploma from C. Leon King High School, and previously held the position of Treasurer of the King High School Division of the French National Honour Society and the Science National Honour Society. Abigail is currently acting as President of the French Cultural Club for SMU International Connections, and as a Resident Advisor and Fire Warden for the SMU Residences at Prinsep.
Abigail is a Former Florida Science Olympiad Champion in chemical forensics and protein modelling, and former Health Occupation Student’s Association District Champion in clinical nursing.
In her free time, Abigail enjoys interacting and caring for animals. She has previously volunteered for the Humane Society of Tampa Bay as an Adoption Assistant.