Sun Life Survey Highlights Inflation Challenges for Retirees in Asia

As Asia Pacific faces a significant demographic shift with nearly one in four over the age of 60 by 2050¹, new research by Sun Life Asia reveals challenges and opportunities for retirement planning across the region.

The research, titled Retirement Reimagined: facing the future with confidence, surveyed over 3,500 respondents across mainland China, Hong Kong SAR, Indonesia, Malaysia, the Philippines, Singapore, and Vietnam, about their aspirations and planning practices as they prepare for old age.

 

Majority are ill-equipped to deal with financial realities of retirement

The research reveals a growing desire for independent financial security in old age as retirement plans shift from government pension programs and reliance on family to prioritizing individual savings and investments. Saving for retirement was cited as the number one financial goal over the next 12 months across all age groups surveyed. However, many are ill-equipped to deal with financial realities, with 50% saying they will plan for retirement expenses five years or less before retirement, while a worrying 13% will not plan for this at all.

“The retirement landscape in Asia is undergoing a profound transformation, driven by increased longevity and shifting societal norms,” David Broom, Chief Client and Distribution Officer at Sun Life Asia said: David Broom, Chief Client and Distribution Officer at Sun Life Asia said. “Our research shows that while independent financial security is seen as the foundation for a rewarding retirement, many people remain unprepared for the realities they face. Early planning and disciplined saving are key to facing your golden years with confidence.”

 

Filipino retirees caught off guard by higher costs and regret insufficient preparation

While most respondents in Philippines save at least 10% of their income for retirement, an alarming 37% do not. When asked about planned sources of income in retirement, the average expectation was for 20% of income to be drawn from cash savings, underscoring a potential missed opportunity to maximize retirement income through investments and ensure it keeps pace with inflation.

In a warning sign to future generations, 21% of retirees in the Philippines expressed that they had not planned their retirement expenses. This has led to 25% of retirees being caught off guard by costs being higher than expected. These include general cost of living (77%) and healthcare expenses (46%). In response, many have been forced to cut spending (62%) and ask their families for support (48%).

And as inflation continues to bite and being notably higher than the Asia average of 11%, those impacted may potentially increase.

Approximately 42% of retirees express regret over past financial decisions with the biggest reasons being not saving enough (73%), followed by not investing wisely (47%), and retiring too early (38%).

“There is a growing awareness among Filipinos about the importance of financial management to achieve a prosperous and comfortable retirement. However, it can be overwhelming for them to begin planning for it,” Sun Life Philippines Chief Client Experience and Marketing Officer Carla Gonzalez-Chong said. “Financial literacy remains key, so and we are committed to this advocacy so we can help more Filipinos overcome the obstacles and enjoy quality lives in their golden years – just as they deserve.”

 

Younger generations are adjusting expectations: retiring later and saving more  

Interestingly, younger respondents within Asia are increasingly aware of the looming challenge and are adjusting expectations accordingly. Current workers anticipate retiring at an average age of 65, seven years later than the average age that current retirees exited the workforce (58).

Similarly, 14% of non-retirees actively have postponed their retirement plans, compared to only 5% of retirees who did the same, reflecting changing economic conditions and personal circumstances. The primary reasons for delayed retirement include the need to save more (59%), the desire to remain physically and mentally active (59%) and the need to cover increased living expenses (46%) and those anticipating a later retirement age are more likely to cite increased living expenses (50%), compared to 25% among current retirees who delayed their exit from the workforce.

Gold Star Planners look to their later years with optimism, while Retirement Rebels struggle 

The survey also reveals stark differences between two distinct groups: the “Gold Star Planners” meticulously making retirement plans, and the “Retirement Rebels” who have none.

The Gold Star Planners plan their expenses more than five years ahead of retirement, save more than 10% of their income for retirement, and are well-protected by insurance and pension products. Meanwhile, the Retirement Rebels have no insurance and pension protection, have not done sufficient planning and are saving around their later years.

The difference in approaches reveals interesting insights. Retired Gold Star planners are more likely to stay within their expected expenses (73% vs. 31%) and less likely to regret post-retirement financial decisions (14% vs. 40%).

The Gold Star group is far more likely to consult professional sources on retirement planning including financial institutions and independent advisers, and they are more they are more confident about their health and financial wellbeing in their later years.

Across all groups in Philippines, the number one aspiration for retirement is spending quality time with family and friends (48%), followed by the prospect of escaping the daily grind of work and relaxing (16%), and global travel (14%). The greatest concerns associated with later years are health issues and physical decline (68%), factors that could put these dreams at risk.

“Ensuring the wellbeing of our growing senior population is a shared challenge in our communities. While health is the most important pillar, it is also inextricably tied to economic security, productive work, strong family and social connections in the community,” Broom said. “We have a unique opportunity to redefine what a secure and healthy retirement looks like and that means empowering people to approach their post-career years confidently with proactive plan for their finances.”

Sun Life has financial solutions that can help Filipinos achieve the retirement they aspire. Products such as Sun Smarter Life Elite, Sun Maxilink Prime, and Sun Senior Care. For those eager to secure their golden years are encouraged to consult a Sun Life advisor for expert advice. Connect with one via www.sunlife.co/TalkToAnAdvisor.