A study of China’s retirement readiness has uncovered limited financial planning and literacy among millennials.
Despite most young people in China being broadly optimistic and looking forward to retirement, a survey from Fidelity International and mobile wealth platform Ant Fortune found that more than half have not prepared for it.
Limited financial planning
Chinese millennials aim to retire around the age of 57 and have overwhelmingly positive attitudes towards retirement, the survey found.
However, only 44% have actually started saving for it.
Among the non-savers, the average age they plan to start saving is 40, which gives them only 17 years to save ahead of their retirement.
On average, the savers are putting aside RMB1,339 (£152, $195, €171) per month.
The gap between what Chinese millennials are saving and what they expect they will need during retirement is massive.
To have a comfortable retirement, they expect to need at least RMB1.63m (£0.19m, $0.24m, €0.21m).
This means, based on current saving levels and interest rates, it would take 59 years to each their retirement goal without investing.
Limited financial literacy
According to the survey, few realise the importance of investing in reaching their retirement saving targets.
More than half of Chinese millennials said they would expect to simply use cash savings and the government pension as their main sources of retirement income.
They are also not very well-versed on effective retirement investment strategies.
Less than a third prioritise long-term returns when buying retirement saving products.
It’s not just millennials, though.
Strong reliance on the government pension and cash savings to fund retirement, and a lack of knowledge on retirement investment strategies, were also found to be prevalent among non-millennials.
Importance of education
Daisy Ho, managing director, Asia ex Japan, Fidelity International, said the survey, “indicates a greater opportunity for investor education around topics such as investment strategy for different life stages to help people achieve a better outcome in retirement”.
“We hope that the young generation will realise the importance of saving. Investment and time in making pension preparations.”
