The Chinese traditional saying of "raising a child to prepare for retirement" is looking increasingly outdated as 26 per cent of Hong Kong parents nearing retirement age help pay for their adult children's monthly living expenses, while 9 per cent help pay towards a home purchase for their children, according to a survey of AXA Hong Kong.
The survey, released by AXA on Thursday, polled 1,013 Hong Kong people earlier this month, tracking the views of parents aged between 49 to 59 and a younger generation aged between 39 to 49.
Among the major findings, nearly two-thirds of people think the concept of raising children as a way to prepare for retirement is outdated.
Nearly one in 10 of these parents also pay for the down payment for a new flat for their children, the survey added. Hong Kong is known as the world's most expensive city in terms of housing and one needs to front up 30 per cent of the value of a property as down payment before they can attain a mortgage. At a median salary of HK$17,500 (US$2,231) a month in Hong Kong, many youngsters have to tap their parents' saving to help raise the HK$1 million needed for a down payment.
As such, there is 67 per cent of respondents at the AXA survey believed that the concept of raising children for preparing retirement is outdated.
"Some middle-aged parents need to prepare for their own retirement while reserving more liquid assets for taking care of their adult children, such as paying a property down payment and providing monthly living expenses. Also, the young generations need to prepare for their retirement lives earlier to avoid being a burden on their parents," said Kevin Chor, chief life product and commercial development officer of AXA Hong Kong and Macau.
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Paying for the wedding of adult children has also been added to the list of top priorities for Hong Kong's middle class, according to a separate survey by China Construction Bank (Asia) earlier this month. The average cost of a wedding in Hong Kong was HK$360,577 last year, according to ESDlife, a company specialising in products and services related to weddings, health and families.
AXA announced the survey result as it launched a tax-deductible deferred annuity plan on Thursday, making it the latest among major insurers to offer the product after the Hong Kong government introduced HK$60,000 tax incentives to encourage people to save more for retirement from April 1.
"We believe that the government tax reduction will incentivise Hong Kong people to consider a deferred annuity as a flexible option for asset accumulation for retirement," Chor said.
While most of the respondents believe they need around HK$4.5 million to afford retirement living, the median of their total assets stood at only at HK$750,000, the survey showed. This means there is a shortfall of HK$3.75 million.
A separate Citibank survey in December showed high children-related expenses may erode pension savings. Married couples with children face a shortfall of HK$4.65 million between their bequests in event of sudden death, and their present income while the gap for childless couples narrows to HK$2.11 million on average, the Citibank survey on 1,224 affluent residents showed.
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