Taiwanese investors are upbeat about their ability to afford a long and comfortable life after retirement, but their lack of adequate preparation suggests misplaced optimism, according to the latest Manulife Investor Sentiment Survey for Taiwan released yesterday.
The quarterly survey showed that seven out of 10 investors are optimistic that they can afford a satisfactory retirement that may last 20 years, sustained mainly by savings.
About 56 percent of respondents said that their top priority was saving enough money for retirement, higher than investors in other Asian markets, the survey found.
“Retirement plans heavily reliant on savings may lead to financial strain, and investors should adjust their planning strategy,” Manulife Asset Management Taiwan chief executive officer Thomas Cheong (張維義) said.
There is a mismatch between an investors’ wish to retire early and their ability to do so, the survey showed.
Taiwanese investors on average expect to retire four years before the official retirement age of 65 and then work another seven years post-retirement to make extra money, the survey showed.
Both figures are above the regional average at 60 years old and six years of post-retirement work, the survey said.
Fifty-five percent aim to work an extra six to seven years after retirement for financial and health reasons, and 85 percent view post-retirement work as favorable for staying healthy and connected to society, the survey said.
Many investors are looking to do things unrelated to their existing jobs, and more women expect to work longer than men after retirement, according to the survey.
The desire to continue working after retirement is laudable, but may prove unachievable because there may not be enough jobs, Manulife Asset Management Taiwan chief investment officer Andrew Wang (王彥傑) said.
Elderly workforce participation rates in Taiwan hover at about 8 percent, relatively lower than rates recorded elsewhere in the region, Wang said.
Taiwanese are not planning early enough and often underestimate living costs after retirement, the survey showed.
Many assume post-retirement expenses will be about 62 percent of their current income, which is unrealistic and unwise because the assumption fails to factor in inflation, Wang said.
Healthcare costs will normally rise drastically as people age, as seen in the past decade during which health costs increased by approximately double the rate of inflation, the survey said.
As in most parts of Asia, the appeal of cash is strong in Taiwan, with cash accounting for 28 percent of investors’ overall assets, the survey said.
“However, cash is not king when planning for future income,” Wang said, adding that people should consider a range of investment options, especially those with higher returns.