Mother’s Day is a global celebration and falls on different days of the year. It’s the second Sunday of May in many locations including Hong Kong, Singapore and the US. But mum’s special day is celebrated in the UK on the third Sunday before Easter, or 31 March this year.
In honour of mothers, let’s delve into some of the unique concerns of women as they invest for their retirement.
Some headwinds …
Women do behave quite differently when it comes to investing for their retirement, according to our survey on investor confidence and behaviour1 in Hong Kong. We found:
- Women are expected to save 29% less for retirement than men, and could face a bigger shortfall than men.
- Women may also have a longer life in retirement than men because they are expected to live six years longer than men, and they hope to retire two years earlier than men.
Source: Census and Statistics Department, Hong Kong, 2016 life tables.
- Women tend to invest more conservatively than men. Fewer women chose to invest in stocks and funds as compared with men.
In essence, women may not be investing enough, and are expected to retire at a younger age with less savings. Their smaller retirement nest egg might need to be stretched over a longer retired life, exposing them to higher risk of outliving their savings.
… some solutions2
It is important to recognise the financial challenges one could face in retirement. Plan and invest for retirement early, and be engaged in planning and investing decisions with their partners.
- Put more of their savings to work. Instead of mainly relying on deposits, getting exposure to equities and bonds may provide more protection against the eroding effects of inflation. Nonetheless, it’s important to build a well-diversified portfolio that can navigate through different market cycles.
- Invest regularly. As a disciplined approach to investing take root, one may become more confident about investing to grow their portfolios. More importantly, be able to tap opportunities at times when emotions might inhibit getting invested.
- Adjust their portfolios as time horizon changes. Retirement is a long-term goal. Instead of adopting a single investing strategy blindly, it is important to understand the appropriate level of risk for retirement savings, based on balancing risk tolerance with time horizons. In other words, invest for growth when further from retirement, and adjust to a more conservative portfolio as retirement approaches.
1Source: J.P. Morgan Asset Management, “J.P. Morgan Investor Confidence Index in Hong Kong” (June 2018).
2Source: J.P. Morgan Asset Management, Principles for a successful retirement – Hong Kong (May 2018). For illustrative purposes only, exact allocation of portfolio depends on each individual’s circumstances and market conditions.
Investment involves risk. Investors should consult professional advice before investing. The opinions and views expressed here are those held by the author as of the date of this publication, which are subject to change and are not to be taken as or construed as investment advice.
Download Retirement Insights Publication: Principles for a successful retirement – Hong Kong