Hongkongers find it hard to balance family financial obligations with personal retirement planning, a new study finds.

According to the study by Manulife Investment Management, part of its Diverse Asia series on people’s preparedness for retirement, 81% of people in the Hong Kong Special Administrative Region prioritize family needs over their own, a finding that is consistent with trends across Asia.

In Hong Kong, 57% of individuals have financial responsibility for their parents, slightly exceeding those responsible for their children (55%). This strong sense of duty, however, comes at a cost – over 50% of those with financial responsibilities for elderly family members feel that supporting them is a financial burden, the second highest in the region.

Despite these pressures, 44% of Hongkongers who have financial responsibilities for their elderly family members do not discuss such responsibilities with anyone, placing them among the highest proportions compared with other markets.

Scant professional help

Additionally, only 2% of them have sought professional advice, and 69% of Hongkongers said they handle their retirement finances alone with little or no professional guidance.

Many believe financial planners may not understand their needs, highlighting a critical gap in people’s understanding of how professional advice in retirement planning could potentially alleviate their worries.

“While Hongkongers’ commitment to family care is admirable, it’s crucial for individuals to prioritize their own financial well-being as well,” says Calvin Chiu, head of Asia retirement at Manulife Investment Management.

“Balancing personal retirement planning with family obligations doesn't mean one has to be sacrificed for the other. There are numerous resources in the market that can assist in the balancing act, such as mutual funds, regular saving plans, voluntary contributions to MPF, other kinds of investment, and retirement insurance.”

Preference for cash

Meanwhile, Hongkongers favour cash in their portfolios more than their regional peers, especially those who are single and married individuals without children.

Singles without kids hold 53% of their portfolios in cash or fixed deposits, higher than the 44% regional average. On the other hand, married individuals without kids allocate 49% to cash, compared to a 45% regional average.

For Hongkongers with children, the allocation to cash holdings decreased slightly, signalling a shift towards diversification. Married individuals with kids hold 42% of their portfolios in cash, compared to 49% for those married without children. Singles with kids hold 33% in cash, showing a more diversified approach.

“This cash-heavy strategy among Hongkongers, is not surprising given they have been benefiting from high deposit rates offered by Hong Kong banks in recent years. However, given interest rates are coming down, they need to review and reposition their portfolios to maintain the same level of income,” Chiu notes.

“Conventional wisdom may tell us that parents would prefer higher liquidity and therefore would be more cash-heavy to cater for family expenses, but our survey findings actually point to this cohort having more diversified investments, showing less reliance on cash and a stronger focus on other asset classes. This is an inspiration for us all, as having a stable income also means longevity of income for their other needs.”

Ageing population

Demographic challenges are also becoming increasingly pronounced. With 19.1% of its population over the age of 65 and 24.5% of adults between 50 and 64, Hong Kong SAR is categorized as an aged society, with a median age of 44.9 years – the second highest in Asia.

In contrast to younger nations in Asia that benefit from demographic dividend, Hong Kong's shrinking working-age population puts additional pressure on its economy and social services.

This demographic shift means there are fewer working-age individuals to support the growing number of retirees, which amplifies the economic strain on society as a whole. Cash savings alone are unlikely to generate the necessary returns to support individuals through extended retirement periods and increasing healthcare costs.

Chiu adds: “While cash can help preserve retirement savings and cover daily expenses, it may not outpace inflation, limiting long-term wealth growth. Given the low allocation to investments, Hongkongers have a leapfrog opportunity to enhance their financial security by diversifying their portfolios with income-generating financial products that are aimed at providing a stable income stream.

“Proactive steps, including open discussions about financial responsibilities and retirement plans with both family members and professional advisors, are essential. Additionally, they may consider utilizing the tax-deductible voluntary contribution programme under the MPF scheme and creating a separate investment portfolio for retirement savings to supplement their MPF.”

The survey, conducted between April and May 2024, included 4,000 individuals from the lower-middle to high-income brackets across Hong Kong, Indonesia, mainland China (Beijing, Guangzhou, and Shanghai), Malaysia, Singapore, and Taiwan.