Hong Kong retirement provision: A desire for greater flexibility

Overview

According to the Census and Statistics Department, by 2043, one in three Hong Kong people will be aged 65 or above. This is higher than the World Health Organization’s definition of a super-aged society, or a society in which those aged 65 and above account for more than 20% of the total population. This dramatic change in demographics is gradually challenging the traditional concept of retirement for many. At 85.6 years in 2025, the life expectancy of people in Hong Kong is among the highest in the world. This means that people will have more years in retirement to plan for, making retirement financial planning increasingly important.

In recent years, new retirement approaches such as “micro-retirement” and “unretirement,” or re-employment after retirement, have emerged globally. These newer retirement approaches are gaining traction in Hong Kong too, reflecting a desire for a more flexible and independent retirement experience in the second half of their lives. However, achieving these changes also brings with it new financial planning challenges for individuals and their families. 

In May 2025, T. Rowe Price carried out its first ever Hong Kong retirement survey¹ , which confirmed that there was indeed strong potential demand among Hong Kong workers for a more flexible approach to retirement than the conventional approach of working until 65 then retire all-at-once. 

The survey highlights how Hong Kong’s aging working population is transforming traditional retirement attitudes and concepts. There is a shift underway from the standard conventional “retire at 65” model toward newer, more flexible ideas like “micro-retirement” and “working after retirement.” These findings emphasize that retirement is not just about saving. It involves strategically converting portfolio assets into stable income streams in order to maintain desired lifestyles during various lifetime phases. The retirement preferences of Hong Kong workers revealed by the survey supports a two-stage approach to retirement planning. 

The first phase is the traditional accumulation phase, during which individuals make early, diversified investments into instruments such as employer schemes, Mandatory Provident Fund (MPF), stocks, bonds, and mutual funds to leverage the power of compound interest over time. We suggest saving at least 15% of monthly income while also making appropriate adjustments to the investment portfolio based on market conditions and risk tolerance. 

The second phase of retirement planning is the withdrawal phase, where retirees should address monthly cash flow needs, retirement duration, market volatility tolerance, liquidity for unforeseen expenses, and define their legacy or charitable goals.

Strong desire for a more flexible retirement

T. Rowe Price conducted its first Hong Kong retirement survey in May 2025, polling 600 Hong Kong residents over the age of 30. A key finding is that over half (52%) of surveyed Hong Kong residents are turning away from the traditional retirement age of 65, with 47% embracing innovative approaches including ‘micro-retirement’ and ‘unretirement.’

"Nearly half of surveyed Hong Kong people would prefer a flexible retirement.*"

Micro-retirement involves a period of time away from work which can differ significantly in purpose and duration from the traditional ‘sabbatical.’ A micro-retirement is a longer, more self-directed employment break that could involve a career reset without returning to the same job. In contrast, the sabbatical is typically an employer-sponsored, shorter break focused on professional development with the expectation of a return to the same employer. 

Among those survey respondents opting for flexible retirement models, micro-retirement was favoured by 80%. The main drivers include maintaining work/ life balance (79%), relieving work pressure (58%), or pursuing personal interests (39%). Most respondents believe that micro-retirement is best pursued after age 50, and lasting over a year. However, they also recognize that micro-retirement requires significant financial resources, with most saying they would need over HK$2 million in assets to consider this approach.

‘Unretirement,’ or returning to work post-retirement, is also welcomed by many. The trend of retirees returning to the workforce, is gaining traction due to factors like demographics, an individual’s financial needs, desire for social engagement, and the pursuit of new opportunities by those who remain fit and healthy in their post-retirement years. This trend is already reshaping workplaces in Hong Kong and prompting employers to adapt to an older, experienced workforce.  

79% of those opting for flexible retirement models favoured this approach. Interestingly, staying mentally active (69%) was held to be a more compelling reason to ‘unretire’ than maintaining income levels (62%). Most supporters of unretirement said they would be satisfied with earning less money in their unretirement period, with 40% planning to return to the labour force within six months of retiring.

These newer emerging retirement approaches are particularly welcomed by those over 50, with 58% favouring flexible retirement compared to 40% under-50s. Notably, 60% of over-50s prefer to retire based on personal planning rather than a fixed age, compared to 47% of under-50s, underscoring their desire for flexibility.

Need for more robust retirement planning

While over half of respondents estimate they will need over HK$5 million to retire comfortably in Hong Kong’s high-cost economy, critical knowledge gaps and mismatched investment strategies pose challenges to achieving a secure retirement and significant barriers remain. Only 20% of respondents feel they are familiar with the retirement options available on the market, including only 26% of those aged over 50 who are closer to retirement.

Additionally, 71% describe themselves as tolerant of medium-to-high investment risk, but most rely on conventional options – such as time deposits, or bank savings, which may not support the growth needed for a secure retirement. Notably, 40% have no retirement savings goal, and 32% of those favouring flexible retirement feel unprepared, compared to 22% of those preferring to retire permanently at the standard age of 65. These challenges constitute a part of the Hong Kong retirement picture that deserves more attention. T. Rowe Price survey highlights an urgent need for more robust retirement planning to support flexible retirement goals.

Retirement planning is not just about saving

Under the traditional concept, retirement planning seems to be just “saving more money”, and when you reach a certain age, you can enjoy your old age in peace. However, in Hong Kong, where the cost of living is high, retirement is not only about saving enough money, but also about how to make good use of the assets accumulated over the years and flexibly convert them into sufficient and stable retirement income to achieve the ideal life in their minds.

To some workers, retirement planning may seem complicated making it very difficult to know where to start. We think dividing retirement planning into two phases – the accumulation period and the withdrawal period – is a good way to begin.

Stage 1: The accumulation period. Steady savings, flexible allocation

The accumulation period will be the most familiar stage in retirement planning for many. In this phase, it is especially important for younger workers to start saving early. Individuals should make good use of common investment tools and retirement solutions such as the MPF, employee voluntary contributions, mutual funds, stocks, bonds and deposits to diversify your investment portfolio. As an investor, starting to save early can help you to achieve a better result with less effort by harnessing the power of compound interest to your advantage.

We believe ideally that Hong Kong workers should aim to save at least 15% of their monthly salary per month, while over time your savings ratio should be gradually increased as your level of income increases. It is also important for savers to remember to regularly review and adjust asset allocation according to their personal risk tolerance, responding flexibly to market changes in order to build a solid foundation for future retirement.

Stage 2: The withdrawal period. Creating a personalized retirement income stream

After we reach 50 and enter the second half of our lives, or when we are close to our desired retirement age, the biggest challenge faced by retirees is how to convert the past years of savings and investments into a stable cash flow stream that can continue to support their desired quality of life in a post-retirement future. We recommend that savers clarify their retirement income needs by considering the following five key questions.

1. How much cash am I likely to need per month?

Do you want to maintain your current standard of living, or fulfill your dream of traveling the world, changing house, or moving overseas? The monthly retirement income you need directly depends on your intended retirement lifestyle.

2. How long should I save for retirement?

Are you planning to retire early? What is the family health history? As the average life expectancy in Hong Kong continues to increase, retirement reserves may need to support the retiree for the next 30 to 40 years.

3. Is market volatility acceptable?

Are there fixed expenses such as mortgages, school fees, and other family responsibilities? Is your portfolio strong enough to handle stock market volatility and drawdown? Can you withstand the ups and downs of investment income?

4. How high is your liquidity?

Do you plan to start a business, support your children, or cope with unexpected expenses after your retirement begins ? If so, a certain amount of liquid assets must be reserved to facilitate the flexible mobilization of financial resources.

5. Is there an estate or charity plan?

Do you want to leave your assets to your family, or to support a favorite charity? Such goals will affect your final asset allocation and investment strategy.

Concluding thoughts

Planned retirement does not unfortunately mean worry-free. Individuals and families saving for their retirement need to be proactive and diversified throughout Stages 1 and 2. In reality, there is no one-size-fits-all solution that can perfectly meet all retirement income needs. It is important for savers to plan holistically based on their personal goals, desired quality of life, and an affordable financial strategy. Different asset classes and savings products have different return expectations, risks and liquidity. Everyone should allocate their retirement assets flexibly, diversified according to their own risk tolerance and personal lifetime goals and with timelines that seek stable cash flows and long-term capital appreciation. 

We recommend that Hong Kong savers should seek independent expert financial advice at each stage of the retirement planning cycle. T. Rowe Price – a leading global asset management firm with US$1.68 trillion in client assets (as of June 30, 2025²) – is well-placed to help Hong Kong workers achieve their goals. With over 85 years of investment experience, about two-thirds of the assets we manage are retirement-related, making us one of the leaders in the global retirement industry. The firm leverages its longstanding retirement expertise and independent proprietary research to ask better questions that help drive better outcomes for our clients.