How much do you need to retire in Hong Kong

After years of hard work, it’s understandable to have a specific date to look forward to for a well-deserved long vacation. However, the equally crucial consideration of "how much money" is required to retire comfortably often gets less attention.

How much you need to retire in Hong Kong has been a recurring question – a good one that is, but there is never a nuanced enough answer that tells you exactly how much you need for your own unique circumstances.

Understand how to make time and compound interest your allies, and put them to work to make your ideal retirement age a reality. Regardless of your current age, it’s never too late to set the wheels in motion now.

Hong Kong has no official retirement age, but most companies require staff to call it a day between 60 and 65 years of age. The average life expectancy for males and females in 2023 is 82.5 years and 87.9 years, respectively.

For an average Hongkonger, you will need to have enough retirement funds to last around 20-30 years after retirement.

Retirees are estimated to need approximately US$1.1 million (HK$8.6 million) for a comfortable lifestyle to support their retirement according to a recent study, second only to the US at US$1.2 million (HK$9.4 million).

Worse still, Hong Kongers face the biggest gap between their savings and their target globally, which stands at US$815,000 (HK$6.4 million). Because of such a gap, the same survey found that seven out of 10 people in Hong Kong believe they will need a part- or full-time job after retirement.

Again, this is an estimate. The true amount will differ from individual to individual, and it’s good to keep in mind that these values will also increase over time due to:

• Rising prices and inflation, which diminish the value of your money

• Increasing life expectancy, which means you are likely to need a bigger retirement sum

• Healthcare costs with old age, including increasing health insurance premiums as you age

While it is true that we cannot possibly foresee the future, it is entirely possible to take small, simple steps now to build up a retirement nest egg for our future selves.

Are your MPF savings really enough for retirement?

For many, the first step to retirement planning is to look into their public pension savings. The Mandatory Provident Fund Authority reveals a staggering figure: the total assets of the MPF scheme have reached HK$1.14 trillion as of the end of December 2023.

But this means the average account balance for MPF members stands at HK$242,800, a stark contrast to the HK$8.6 million considered to make a comfortable retirement.

Most employed residents in Hong Kong would have their MPF contributions throughout their working life, and the accumulated savings in the MPF accounts should not be overlooked and left unattended. Managed well, the MPF pot would be a great addition to your overall retirement pot.

Review your MPF portfolios regularly to ensure it is well-diversified, and not prone to home-bias, and beware of the overall costs of your investments.

Additionally, consider other sources of retirement income in addition to MPF to ensure sufficient funds for your ideal retirement lifestyle.

Your money starts work as early as you want it to

Compound interest is dubbed the 8th wonder of the world by Albert Einstein. Especially in retirement planning, the power of compounding becomes even more significant, as it leverages a longer timeframe to grow your money exponentially.

Did you know that 99% of Warren Buffett’s net worth was accumulated after he turned 65 years old? And that's because he started when he was 10 years old. This goes to show that even small contributions can snowball into substantial sums when given decades to compound.

To accumulate US$1 million (about HK$7.8 million) by 65, you will need a monthly investment of US$506 (about HK$3,900) if you start at age 30 (assuming a 7.64% annualised return on your portfolio).

If you start a decade later, you will instead, need a monthly investment of US$1,161 (about HK$9,000). That's an average of US$655 (about HK$5,100) worth of free work by compounding that you are missing out on.

Besides, starting early affords you the luxury of taking on more risk and higher growth investment options to ride out market volatilities with the most important asset you have — time.

Endowus, Mar 2025