Majority of Consumers in Asia Regret Not Starting to Save Earlier for Retirement
New study by LIMRA and Society of Actuaries reveals gap in retirement funds and significant interest in annuities
Bangkok Thailand, May 14, 2018 – According to a new study by LIMRA Secure Retirement Institute (LIMRA SRI) and the Society of Actuaries (SOA), on average, consumers in Asia begin to start to save for retirement at age 40. The survey found the majority (54 percent) regret not starting to save earlier and less than half believe their savings will last throughout their retirement.
LIMRA SRI and the SOA conducted a survey of more than 9,000 consumers ages 30-75, across nine markets in Asia to examine the current state and future opportunity of the retirement market in Asia.
“Overall, the population over age 60 in Asia will triple by the year 2050. This will have a tremendous economic impact not just on the nations in Asia but also the global economy as a whole,” said R. Dale Hall, FSA, CERA, MAAA, managing director of research, SOA. “Understanding how consumers in Asia perceive financial risks in retirement and the steps they are taking to prepare for retirement will be important as the industry develops the appropriate products and services to serve the local markets.”
The study found that more than three quarters of consumers in Asia expect to have a shortfall in retirement savings at age 60. In addition, consumers in Asia underestimate how long they will live in retirement by as much as 24 percent. This combination of inadequate retirement savings and misjudging longevity risk creates a significant challenge for consumers to achieve financial security in retirement and poses substantial economic risk for countries in Asia.
The majority of consumers surveyed say they do not work with a financial professional to help with household decisions. Notably, this is significantly higher in Japan where only 1 in 5 households work with a financial professional. Across Asia, the study found 65 percent of consumers do not have a formal written plan for managing income, assets and expenses during retirement.
“Our U.S. retirement research indicates that working with financial professionals and developing a written retirement plan significantly improves retirement outcomes,” said Larry Hartshorn, corporate vice president, LIMRA International Research. “We are encouraged that attitudes around retirement planning are evolving. While most consumers ages 60-70 have done the least retirement planning activities, younger consumers are taking steps to estimate their expenses and income in retirement.”
The study revealed 7 in 10 consumers in Asia are interested in converting a portion of their assets into an annuity ( chart ). The top three features most important to consumers were creating a guaranteed income stream, protecting or preserving their initial investment and guaranteeing returns on their investment.
“It is not surprising that annuities strongly appealed to consumers in Asia as they are concerned about outliving their assets in retirement,” noted Hall. “Investing a portion of one’s assets toward a guaranteed lifetime income, such as an annuity, is one way to mitigate longevity risk.”
Michael Nowak, 847-273-8811, firstname.lastname@example.org
LIMRA is a worldwide research, consulting, and professional development organization that helps 600 insurance and financial services companies in 62 countries. Visit LIMRA at www.limra.com. Follow us on Twitter: @LIMRANewsCenter
About the Society of Actuaries
With roots dating back to 1889, the Society of Actuaries (SOA) is the world’s largest actuarial professional organization with more than 30,000 actuaries as members. Through research and education, the SOA's mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal challenges. The SOA's vision is for actuaries to be the leading professionals in the measurement and management of risk.