Majority of Filipino investors have high expectations of their lifestyle in retirement despite acknowledging future financial and health burdens, a financial services firm said.
Manulife Philippines on Thursday cited data from its Manulife Investor Sentiment Index (MISI) survey, which showed that 63 percent of Filipino respondents said that retirement planning is their top financial priority.
Only 7 percent expect to have to scale back their lifestyle later on in life, and 31 percent believe they will be living more or less the same lifestyle as they currently have, the firm said.
The MISI noted that millennial investors, who are under 35 and therefore the furthest away from retirement, are the most optimistic: 68 percent of them expect to upgrade their lifestyle. However, optimism declines with age: Only 40 percent of the over-50 expect the same, indicating that over time expectations are tempered by reality.
“When millennial investors in the Philippines reflect on specific aspects of their retirement, they reveal worries about likely future financial and health burdens,” Manulife said.
For example, it said, half of millennial investors expect that during their retirement they will have to financially support both their parents and children.
It also found out that nearly half of the millennials also anticipate they will need to pay down a debt or mortgage in retirement.
Furthermore, the survey said 74 percent of millennials also expect their health to deteriorate in retirement, with just over half expecting that it will deteriorate to the point where they can no longer work.
“While it’s great that many investors in the Philippines are seriously thinking about their retirement, their rosy expectations may not accurately reflect the challenges ahead. Investors must be diligent about retirement investment planning given the financial and health challenges of increasing life expectancy. Millennials in particular should invest early and often,” said Aira Gaspar, Manulife Philippines chief investment officer.
The survey further revealed that Filipino investors would benefit from a more disciplined and informed approach to financial planning.
Over a quarter of investors invest randomly while only 15 percent have a regular investment plan. Furthermore, among investors who are worried about their lifestyles in retirement, only 39 percent choose to invest in stocks or bonds, which can offer greater returns than savings accounts or working overtime, it added.
“A savvy investor plans for the long-term and this is especially true for retirement. Developing an investment plan early and reviewing it often will help prevent disappointment later in life. We all know about seeds; the sooner you plant them, the bigger the tree. It’s the same with investing for a decent retirement,” Ryan Charland, president and chief executive officer of Manulife Philippines, said.
MISI in Asia is a yearly proprietary survey, across eight markets in the region, measuring and tracking investors’ views on their attitudes towards key asset classes and issues related to personal financial planning.
The latest survey was conducted between September and October 2016 by TNS, a leading global research firm.
The Manulife ISI is based on 500 online interviews each in Hong Kong, China, Taiwan, Thailand, Singapore, Malaysia and the Philippines, and 500 face-to-face interviews in Indonesia. Respondents are middle class to affluent investors, aged 25 and above who are the primary decision maker on financial matters in the household and currently have investment products.
The Index is calculated as a net score (percentage of “Very good time” and “Good time” minus percentage 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.