Retirement savings targets: HK$2.54m for men, HK$3.16m for women on HK$20,000 a month

Retirement is one of life’s major events and should never be handled casually; with people living ever longer, retiring worry-free demands a thorough plan. In her column, Fidelity Hong Kong managing director Cheng Kim-wai set out three key points every saver should note.

What is the Fidelity Retirement Index’s 67% replacement ratio?

The Fidelity Retirement Index divides retirement-period income (including MPF, other pensions, personal assets and savings) by pre-retirement working income, finding that a comfortable retirement requires a living standard sustained by 67% of pre-retirement salary — a figure trending upward year by year. Applying the 67% replacement ratio, assuming retirement at 60, the savings targets are:

Women need more because they generally live longer — they must save more and start earlier.

Key point 2: how fund performance gaps move the retirement target

MPF is one pillar of retirement protection: members must pick funds whose risk level suits them and can hit the target return, and review their accounts and portfolio performance regularly. A Gadbury Group analysis of MPF database performance found that among Hong Kong balanced funds across providers over 10 years, the top 25% by annualised return beat the bottom 25% by 4 percentage points over one year — stretching to 5.3 points over ten years — proof that capable managers deliver steadier, higher long-run returns that help members reach their goals sooner.

Key point 3: compounding works best over longer horizons

The earlier you start preparing for retirement, the better. Take a man earning HK$20,000 a month: with the same investment return and target, starting at 20 with monthly MPF contributions of HK$1,700 (about 8% of salary) at a 5% annual investment return accumulates over HK$2.5 million by retirement at 60; starting at 30 requires nearly HK$3,000 a month, with contributions rising to 15% of income. If you lack the time or knowledge to execute a retirement plan, seeking objective investment guidance early is a solution worth considering. The MPF education hub explains how MPF returns compound.