The Three Pillars of Retirement Planning

The three pillars of retirement frame our comprehensive solutions for successful retirement planning. Having each of the three pillars in your plan allows you to rest assured knowing that your savings will last and your ideal retirement is protected from unexpected costs along the way.

1.Build Your Wealth
Boost your savings to cover future retirement costs and keep pace with inflation.

2.Protect Your Wealth
It's likely you'll need to spend more on healthcare and medical treatment as you get older, but don't let the cost of hospital bills and medication dent your nest egg.

You can safeguard your retirement savings with health insurance that covers unexpected medical costs and give your loved ones financial protection, too, by securing adequate medical and life coverage.

3.Enjoy Your Wealth
We all want to enjoy ourselves when we stop working, but devoting yourself to new or existing hobbies, traveling abroad, and even daily expenses such as groceries or paying your apartment's management fee can quickly eat into your savings.

By setting up a steady stream of incoming payments over time, you can ensure you don't spend too much, too fast and leave yourself with too little for the years ahead.

A retirement plan supported by all three pillars provides comprehensive protection for your future, but putting together your ideal retirement plan takes time and you may want to prioritize one or two of the pillars for the time being.

Always consult a qualified financial advisor who can help you assess what's right for you. For complete protection, aim to have all three pillars represented in your plan before you reach your target retirement age.

If you already have health insurance from your employer, that's great, but be sure to check your policy so you can fully understand what's covered and what's not.

You'll often only be covered for basic medical costs or accidental injury while things like accidents or illness when travelling abroad, critical illness, or protection for your immediate family members are not covered. If that's the case, it may be wise to supplement your existing plan.

Also, most health insurance plans provided by employers terminate when you stop working, just when you enter the stage of your life when you're most likely to need medical care. And purchasing insurance in retirement can mean paying higher premiums.

Even if you have basic coverage now, it's likely you can enjoy lower insurance premiums by securing adequate protection before you reach retirement age. This can mean extra savings for the long term, giving you more to enjoy life with once you retire.

The short answer is it's never too early, but we know people have different priorities depending on where they are in their lives. The important thing is to get started if you haven't already and remember that every dollar helps!

Starting Your Career
Retirement may seem a long way off and getting yourself on the property ladder, saving for a wedding or just going out and enjoying yourself may seem more important. Many feel they can't make a meaningful contribution to long-term savings at this stage, so they will just put more into savings and investments when they're further along in their careers. But take a look at the effects of compound interest and think again. You're in the best place to save less and make more.

Even setting aside a few hundred dollars a month can make a difference over time. Let's illustrate with an example. Jackie and Sam both have the goal of saving HKD7 million before retirement at age 65. They start saving at age 25 and 40 respectively. Let’s assume a 5% annual rate of return, compounded monthly.

^{*Note: Rounded to the nearest thousand}

Starting earlier, Jackie's monthly contributions to her retirement savings are less than half of Sam's (HKD4,587 versus HKD11,755), while Sam has to deposit almost 50% more in total contributions to reach the same savings target. Compounding helps Jackie earn much more interest (HKD4,798,000 compared with only HKD3,474,000 for Sam).

Got Kids?
Every parent wants to put their children’s future first, but don't neglect your own retirement planning. Try to balance what you put away in an education fund with what you put away for yourself later. Your child may enjoy low-interest loans and maybe even a scholarship to help them pay for college, but you won't enjoy the same level of assistance in retirement and being a financial burden on your children will undo all the hard work you put into giving them the best start in life.

Retiring in 10-15 Years?
OK, if you haven't started yet, it's not too late, but this now needs to be priority number one. Time to speak with a qualified financial advisor who can help ensure you're protected for the future with sufficient savings to cover daily expenses.
Contact us now to arrange a consultation.

"Retirement income" simply means a regular stream of incoming payments during retirement. This can help you cover the costs of everyday living expenses.

To find out more about retirement income and how you can set yours up, see our Retirement Income options or contact a financial advisor for more information. 

Your risk profile goes a long way towards determining which kind of investments suits you best. Before embarking on your investment journey, it's always best to consult a fully qualified financial advisor who can make recommendations based on your unique circumstances and financial goals.

If you'd like to get a general idea of your risk appetite before you meet with an advisor, you can also fill out our short Risk Profile Questionnaire.