Bangkok--3 Apr--Manulife
- Half (51%) of investors believe they are on track with or ahead of their financial goals
- The majority (79%) believe they will improve or maintain their current lifestyle in retirement
- But nearly half (49%) of investors anticipate that healthcare will become unaffordable in retirement
Thai investors place a high priority on saving for retirement but fear their savings will fall short of future costs, according to a recent survey by Manulife. The Manulife Investor Sentiment Index (MISI*), conducted for the first time in Thailand in late 2016, found that while many investors take retirement planning seriously, they worry about the high toll of likely family and health costs.
Nearly one-in-five (18%) investors rank retirement as a top financial priority and almost one-in-three investors (30%) would prioritise boosting their retirement fund if given a lump sum of three years' salary. While many (51%) investors believe they are on track or ahead of schedule when it comes to their retirement plans, far more (79%) are optimistic that they can maintain or improve their current lifestyle later on in life.
Investors are concerned, however, that their retirement savings may fall short of future requirements. Almost half of them (49%) feel they are behind schedule with their financial goals and within this group, 12% believe their shortfall is irrevocable. Two-in-five investors (40%) think they will run out of money in retirement, while more than half (52%) believe they will still need to pay down a debt or a mortgage, significantly higher than many other surveyed markets in Asia.
Future health and family costs expected to outweigh retirement savings for many
Health and family costs are expected to present a particular burden. The majority (69%) of investors believe their health will deteriorate as they get older and nearly half (46%) believe it will worsen to the point where they can no longer work. This is particularly significant as almost half of employed investors (46%) currently receive additional income from a personal business, which they may no longer be able to rely on in retirement. Most (63%) investors expect they will need to financially support their parents in retirement, while 27% expect that they will need to support their children without receiving any in return.
Michael Parker, President & CEO of Manulife Insurance Thailand, said: "Thai investors each have a unique sense of what retirement means for them, whether pursuing personal interests or continuing to work part-time or in a family business. However, they accept that these plans depend upon their future health and that with improvements in healthcare comes longer lifespans and higher medical bills. This means that the cost of a comfortable retirement is growing faster than inflation. Acknowledging this and adjusting financial plans is an important step toward being secure later in life."
Financial education key to unlocking investment return potential
The survey further revealed that investors would benefit from more education about how to boost their retirement funds. When asked how they would reverse a financial shortfall later on in life, the majority of investors who expect to have to scale back on their lifestyle in retirement (64%) indicated they would increase their savings while significantly less (24%) would opt to invest more in stocks and bonds which offer more competitive returns. Furthermore, 13% of these investors have no idea what they would do, indicating a lack of awareness of investment options available.
Investors may also benefit from more effective planning to maximise their returns. Those who save put nearly a third (32%) of their savings into unplanned deposits or investments with no specific purpose, indicating that with more structure and incremental targets, they might have a better chance of meeting their long-term financial goals.
Finally, investors' aversion to risk may undermine their future financial security. Many (60%) prefer their portfolio to be in low-risk investments which may not be the right approach for those younger investors who have time to ride out market volatility. On average, 35% of investors' assets are held in cash or deposits but the majority (63%) still believe they are making enough effort to diversify their portfolio.
Michael Reed, Chief Executive Officer, Manulife Asset Management Thailand, said: "In the current low interest rate environment, relying on cash deposits is unlikely to yield attractive returns and may not give investors the return they deserve. Everyone should create an investment portfolio that reflects their appetite for risk and understanding how the stock market works is a crucial part of this. For those investors who are unsure where best to put their money, a trusted financial adviser can be a real help. Planning for retirement is a journey, not a race, and no one should feel they have to do it alone."
*About Manulife Investor Sentiment Index in Asia
Manulife's Investor Sentiment Index in Asia is a yearly proprietary survey measuring and tracking investors' views across eight markets in the region on their attitudes towards key asset classes and related issues. The Index is calculated as a net score (% of "Very good time" and "Good time" minus % of "Bad time" and "Very bad time") for each asset class. The overall index is calculated as an average of the index figures of asset classes. A positive number means a positive sentiment, zero means a neutral sentiment, and a negative number means negative sentiment.
The Manulife ISI is based on 500 online interviews each in Hong Kong, China, Taiwan, Singapore, Malaysia, Philippines and Thailand, and 500 face-to-face interviews in Indonesia. Respondents are middle class to affluent investors, aged 25 years and above who are the primary decision maker of financial matters in the household and currently have investment products.
The Manulife ISI is a long-established research series in North America. The Manulife ISI has been measuring investor sentiment in Canada for the past 18 years, and extended this to its John Hancock operation in the U.S. in 2011 and Asia in 2013. Asset classes taken into Manulife ISI Asia calculations are stocks/equities, real estate (primary residence and other investment properties), mutual funds/unit trusts, fixed income investment and cash.
The latest survey was conducted between September 2016 and October 2016 by TNS, a leading global research firm.
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