Save grain against famine — children are no retirement plan

“Saving grain against famine, raising children for old age” is traditional Chinese wisdom, but social and economic change has made the second half unreliable. A comfortable old age now demands planning ahead, says Midland Financial Group business director Liu Shu-wing, who unpacks the risks retirees face.

What risks follow retirement?

Income stops but spending doesn’t — plus medical and longevity risks. Earnings shrink or stop after retirement while daily expenses continue; longer life expectancy stretches retirement spending; health problems can bring costly medical bills and long-term care. Only thorough planning during working years secures a worry-free retirement.

Is the government safety net enough?

No — it covers basic needs only. Government schemes include the Social Security Allowance (fruit money): old-age allowance from 65 at HK$1,035 a month, disability allowance up to HK$2,650, and CSSA standard rates of HK$2,680 a month for over-60s, subject to means tests. The MPF, launched December 2000, is a privately managed mandatory scheme with employer and employee each contributing 5% of income (capped at HK$1,000 monthly); at 65 you get 100% of the mandatory portion, though the employer portion can offset severance or long-service payments. These schemes target basic elderly needs, not a maintained living standard; the MPF’s voluntary-contribution portion lets employees top up retirement reserves.

What principles guide retirement planning?

Capital safety, reasonable returns, inflation resistance. Liu says insurance products with forced-saving features suit people who save little or lack investment know-how; savings or annuity plans as part of retirement finances work more steadily and effectively.

To plan for retirement and compare MPF funds, visit MPF fund comparison.