Filipino investors confident about retirement, though many plan too late – Manulife
OREANDA-NEWS. October 14, 2015. A survey by Manulife has shown that around 93% of Filipino investors are confident about their financial situation in retirement. However, more than a quarter (26%) of those that have begun planning for their retirement started their plans in their 40s or older.
The research carried out for the Manulife Investor Sentiment Index revealed that more than four fifths (82%) of investors have already started retirement planning. However, the average age when Filipinos start their retirement planning is 35.5 years. Furthermore, among those who have not started retirement planning, the average age at which they intend to begin is 41 years.
With half of Filipino investors expecting to retire between the ages of 51 and 60, many may not be devoting enough time to retirement planning.
A 41-year-old Filipino who wants to retire at 60 will therefore only have 19 years to plan and save enough to maintain their current standard of living in retirement – according to Manulife Asset Management research, the average married couple in the Philippines face a joint retirement duration of almost 21 years*. However, planning to retire at 51 means he or she would have just 10 years to prepare.
“Expenditures are unlikely to fall significantly during retirement and people could live in retirement longer than expected. Investors also need to take into consideration the effect of inflation, which erodes retirement savings by lowering purchasing power and therefore living standards,” said Ryan Charland, President and CEO of Manulife Philippines.
“We encourage investors to plan for retirement early to increase their chances of having enough to support the lifestyle they want once they retire, without having to depend on family or additional sources of income’” Charland added.
The survey also showed investors preparing for their retirement in the Philippines save an average of 12% of their monthly income towards retirement and wealth accumulation. They expect 58% of their retirement income to come from cash savings, insurance saving products and pensions, 13% from a full or part time job and 11% in the form of financial assistance from the family.
The study further found that investors are focusing on building up their pension plans, with almost all respondents (97%) making mandatory contributions and nearly two thirds (64%) making additional voluntary contributions.
“Many Filipino investors recognize the need to supplement their mandatory pension plans to maintain their current standard of living in retirement,” said Aira Gaspar, Chief Investment Officer of Manulife Philippines. “We feel the most effective way to achieve this is to make regular contributions to a portfolio of investments that are diversified across asset classes that match the investor’s risk and return objectives. This approach could reduce the risk of outliving one’s retirement income by maximizing returns potential within one’s risk tolerance levels.”
Gaspar further shared that “Achieving this level of diversification can be a challenge. Therefore, we encourage investors to consider working with a financial advisor who can help them create a retirement saving plan that matches their specific financial and lifestyle goals.”
* Based on the Asia Retirement Duration Model, which forecasts joint retirement durations using average actual retirement ages and husband-wife age gaps for married couples. Source: Manulife Asset Management, Live long and prosper? Retirement and longevity risk. June 2014.
For more findings and related information from the Manulife Investor Sentiment Index in Asia, please visit www.manulife-asia.com.
About Manulife Investor Sentiment Index in Asia
Manulife’s Investor Sentiment Index in Asia is a bi-annual proprietary survey measuring and tracking investors’ views across eight markets in the region on their attitudes towards key asset classes and issues related to personal financial planning. The Index is calculated as a net score (% of “Very good time” and “Good time” minus % of “Bad time” and “Very bad time”) for each asset class. The overall index is calculated as an average of the index figures of asset classes. A positive number means a positive sentiment, zero means a neutral sentiment, and a negative number means negative sentiment.
The Manulife ISI is based on 500 online interviews in each market of Hong Kong, China, Taiwan, Japan, Singapore, Malaysia, Indonesia and the Philippines. Respondents are middle class to affluent investors, aged 25 years and above who are the primary decision maker of financial matters in the household and currently have investment products.
The Manulife ISI is a long-established research series in North America. The Manulife ISI has been measuring investor sentiment in Canada for the past 15 years, and extended this to its John Hancock operation in the U.S. in 2011 and Asia in 2013. Asset classes taken into Manulife ISI Asia calculations are stocks/equities, real estate (primary residence and other investment properties), mutual funds/unit trusts, fixed income investment and cash.