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There is a lot to look forward to when you retire: no more rat race, more time to spend with family and friends, and a chance to explore new hobbies and interests. But there are also new challenges that arise.
As you prepare to move to the next stage of your life, here are some things to consider that could help you enter your golden years with peace of mind.
When you no longer have to spend most of your time working, you can live your life to the fullest.
You may already have a lot plans for your retirement, as well as some big dreams. However, even if you have already saved a lot for retirement, are you financially well-prepared?
As you approach retirement, you don't want to be bogged down by outstanding debts. The mounting interest can quickly start to eat into your savings and you won't have your regular income to replenish it. So take a look at your accounts and wherever possible, pay back any money you owe.
Starting your new adventure with a clean slate will go a long way towards helping you live your best life in retirement.
Retirement is all about having free time to do exactly what you want to do. So do you really want to spend extra time handling your banking and finances? If you have money sitting with multiple banks, consider consolidating it into one account for easy access and management.
Another major time saver will be to get familiar with digital banking. HSBC Online Banking and the HSBC Mobile Banking app are safe, secure, easy to use, and they allow you to do a huge range of things, from checking your balance to making transfers, setting up bill payments and more. The best part is, you can do all of this from the comfort of your home (or anywhere) instead of having to visit a branch or spend time on the phone.
Still not sure? See how easy it can be to keep your online banking safe and secure.
Whether it's cashing in your MPF, pension schemes or other savings plans, or selling your home to downsize, you could find yourself sitting on more cash than you ever had before. That's great, but what will you do with it?
It's better if you have a plan for that money, and how you'll use it to fund your ideal retirement life, as your retirement savings might not last as long as you expected.
You can use our Post-retirement Evaluation Tool to check how likely your retirement savings will last. The tool also lets you determine your budget at different stages of your retirement, based on the spending patterns of retirees in Hong Kong .
Having that money sit idle in your savings account will only earn you minimal interest, which means you'll be slowly losing money to inflation.
That's why it's important to hold on to good investments. Don't liquidate all of them to try to get more cash for retirement. If you're new to investing, or even if you're a seasoned pro, you should re-evaluate your risk appetite to see what you're comfortable with. You'll have different financial needs in retirement, so you also should re-examine your portfolio to make sure it matches what you're looking for in terms of growth, stability and flexibility.
With advances in science, medicine and nutrition, the human life span is increasing every year. If your grandfather retired in 1970, his life expectancy was about 75 years. By 2020 that life expectancy had risen to over 84, and the trend looks likely to continue.1 That means your retirement fund will need to last much longer than your grandfather's did – and it might even need to last longer than you've planned for.
Have you adjusted your investments to prepare for that? Some retirees choose annuity plans, as they can help to create a stable income stream in retirement, with some of them providing monthly payments up to age 99. However, annuities have no flexibility when it comes to withdrawal. If you also want the flexibility to cash out anytime and capture potential capital growth opportunities, then other types of investments might help.
Conventional logic says that the older you are, the lower your investment risk should be. That's why many people start to steer away from high yield investments as they get older, and shift their portfolio to include more low-risk bonds and funds. A popular approach is to put your retirement assets into both annuity contracts and investment products, so that your portfolio can meet various financial needs in retirement by striking a balance between asset growth, stability and flexibility. Your exact allocation will depend on your own personal goals and your risk appetite.
To learn more on how to construct a retirement portfolio that is suitable for you, talk to one of our Relationship Managers.
It's great news that people are living longer. But with that comes more frequent visits to the doctor, more medication, and other medical related costs: rehabilitation and exercise classes, private nursing and extra assistance as you age. You'll also be more prone to serious illness such as heart disease or dementia, things that could potentially lead to huge medical bills and long-term care costs. If you're not prepared for this, you could end up losing a big portion of your hard earned retirement savings.
Fortunately, a good insurance plan can mitigate the risk and prepare you for any large, unexpected medical cost. There are many different types of insurance out there, so it's important to browse around and find the plans that are most suitable for your stage of life. Discover how our insurance plans can help.
You now have some idea of how to build your post-retirement portfolio to meet your future lifestyle needs. Now you can revisit your plan and update it from time to time.
This will help you make sure you are on track with your retirement dreams, and give you a good awareness of how long your retirement savings will last.
As you get older your banking needs will change, and your banking abilities might change, too. We're here to support you all the way.
Whether you need to simplify your banking processes, get more support when you need it, or appoint a family member as power of attorney, we are here to help you maintain access to your money while keeping it safe.
Find out more about some of our services for the elderly, including:
After working hard for so many years, you may have a legacy you want to share with your loved ones. For personalised advice on legacy planning, talk to one of our Relationship Managers.
We hope this guide has highlighted a few ways that will help make your transition to retirement a happy one. If you have any questions or need any support, please don't hesitate to call us or speak to one of our Relationship Managers.
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