Pave the Way for Future Retirement Life by Mastering Women's Financial Wisdom and Strategies

Mr Alvin Lam, President of Family Financial Education Institute, suggested women start planning for retirement financial management as soon as they start their careers to achieve long-term economic independence

Retirement and financial management have become the core topics for all urbanites in today’s world. Women, especially with their prolonged life expectancy and the rising inflation, have to face more challenges and complexities when they plan for the future. Mr Alvin Lam, President of Family Financial Education Institute, indicated that even though there is significant progress in achieving gender equality, many women still lack sufficient financial knowledge and encounter numerous difficulties after retirement. He advised women to plan for retirement financial management as soon as they start their careers to achieve long-term economic independence and lay the foundation for a carefree retirement life.

Pay Attention to the Current Situation of Women in Hong Kong

According to the latest “Women and Men in Hong Kong - Key Statistics” report by the Hong Kong Census and Statistics Department, women still outnumbered men. Looking at the marital status of women, half of those aged 65 or above is single, including those who are unmarried, divorced, widowed or separated. The latest issue of the Hong Kong Monthly Digest of Statistics also reveals that the average life expectancy of women in Hong Kong is longer than that of men, with the men reaching 81 and women 87. In other words, Hong Kong has more elder women and the number of senior females living alone is increasing every year.

When comparing with men, women have a longer life expectancy, and have to prevent more types of diseases, which requires them to pay special attention to medical expenses.

Mr Lam analysed, “Many women might become homeless in old age, as their life expectancy is longer than men. They therefore have to learn to efficiently manage their finances, preparing sufficient reserves to cope with inflation and the challenges of living alone. They, in particular, have to prevent more types of diseases and pay more attention to medical expenses. On the other hand, modern women have increased opportunities to receive higher education, their career engagement and income level are also elevated. They thus have greater ability and autonomy to manage their finance and life. Women’s social roles have become more diverse.”

Four Key Elements of Retirement

He elaborated four key factors that determine whether a person enjoys retirement life, including money, health, social life, and psychological status. “These four elements are interrelated. According to various international research, those with better health, more friends and social activities, can enjoy happy retirement life even though they don’t have especially high income or savings. But it absolutely doesn’t work with no money at all. A person, for example, has to pay for basic living expenses such as rent, food and utilities. Declining health might lead to potential medical expenses. More entertainment costs might be incurred with more free time in retirement life. If a person often worries about these expenses, it might lead to negative impact, both physiologically and psychologically, on overall health.”

Start preparing financial reserves from managing Income and expenses, and setting savings goals

To alleviate anxiety about the future, Mr Lam suggests women comprehend financial management skills at an early stage, efficiently making use of existing resources to prepare for retirement. They can start with managing income and expenses, and setting savings goals. Once a substantial amount of money has been accumulated, some of it can be planned for investment. The investment can be classified into two main categories: time assets and opportunity assets. “Time assets can create value through time management, accumulating wealth in the long run. Opportunity assets, which are speculation investment, involve capturing opportunities arising within a specific timeframe, requiring correct decisions and actions to acquire returns, such as stock or funds trading, and investing in properties. These two assets, complementing each other with their own pros and cons, are must-haves in an individual’s wealth portfolio.”

Acquire the three treasures of retirement and financial management

Women, when developing the strategy to cope with retirement, have to plan for medium- and long-term financial goals in addition to the short-term emergency savings. Mr Lam mentioned that the government responding to the aging population trend has been promoting “HKMC Retire 3” brand to help retirees “create a lifelong stream of income on an ongoing basis”.

“HKMC Retire 3” covers the HKMC Annuity Plan, the Reverse Mortgage Programme (RMP), and the Policy Reverse Mortgage Programme (PRMP). The Hong Kong Annuity Plan converts a lump sum of cash (premium) from the applicant into a stable and lifelong stream of cash flow. The applicant will receive a guaranteed monthly annuity amount for life as a stable income, as long as the policy remains in effect. The Reverse Mortgage Programme, commonly known as a reverse mortgage, allows individuals aged 55 or above to use their self-occupied property in Hong Kong as collateral to obtain loans from lending institutions without having to move out of the property until they pass away. The Policy Reverse Mortgage Programme, similar to the reverse mortgage, converts the self-occupied property into a life insurance policy without any investment component. These plans help the elderly secure a stable income after retirement, tackling the financial risks associated with longevity.