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Planning for Retirement at Different Stages of Your Life

Retirement planning needs to take place over several decades, from your first job to the time of your retirement. It involves different life stages. By understanding the different circumstances of each stage, and being aware of the advantages that each stage offers, you will be better able to develop appropriate investment strategies for your retirement.


18 to 30 years old (Early adulthood stage)

  • Being young and without heavy family burdens, young people who have just entered the workforce commonly like spending money on lifestyle things (such as travelling, or keeping up to date with trendy products) as well as on further study for self-improvement. Most people at this stage consider retirement as something so remote that there is no hurry to think about or prepare for it.
  • However, young people should make good use of the power of time and the compounding effect. Being so far away from retirement, young people have an investment horizon for retirement savings that can be as long as 40 years. They should consider starting to save, even if in moderate amounts and make appropriate investments as early as possible, while their financial burdens remain light. If they do this, their investments will roll over and increase through the compounding effect, generating an even more significant outcome.

31 to 49 years old (Mature stage)

  • Working people go through different life stages during this period. For many, this may involve them purchasing property for self occupation, getting married and raising children, and their family obligations and expenses will increase accordingly. At the same time, however, since they have already been working for quite some time, their income is likely to increase due to their increasing years of experience and job promotion. As a result, provided that they can carefully control their spending at this stage, they should be able to allocate more money to their retirement investment.
  • At different stages of life, one’s investment objectives and risk tolerance level may change. Working people should therefore review their retirement investment portfolio regularly – for example, every six months or every year - to make sure that it matches with their retirement objectives, risk tolerance level and any change in circumstances. As they grow older, they can gradually reduce higher-risk assets (such as stocks) and correspondingly increase lower-risk assets (such as bonds) to reduce investment risk and protect their returns in the long term.

50 to 64 years old (Middle age stage)

  • Working people go through the “golden period” of their working life during the middle age stage. This is a time when their income and job position is very likely to reach a peak. They may also have a more concrete estimate of the budget they will require to meet certain obligations, such as repaying mortgage loans, or supporting their parents and children financially. Some of these obligations may even have been completed. On the other hand, as they grow older, their medical expenses are likely to rise.
  • As they get closer to retirement age, their investment horizon becomes correspondingly shorter and their risk tolerance level gradually lowers. At this juncture, they can consider switching part of their retirement investment portfolio to lower-risk investment products (such as bonds) to ensure that the portfolio remains stable and healthy.

65 years old and after (Retirement stage)

  • During retirement, without a regular income from a job, retirees’ living expenses need to be covered by savings and irregular income (such as investment interest or returns, rental income, money from children). Market fluctuations or unexpected increases in personal expenses (such as medical expenses) may result in them facing a shortfall between income and expenses.
  • The average life expectancy of Hong Kong people is rising, and retirement life can now easily exceed 20 years. Retirees’ purchasing power in the long run is also likely to be reduced due to currency depreciation caused by inflation. For this reason, it is important that retirees continue to make appropriate investment during their retirement years.
  • Apart from economic considerations, retirement planning should also take into account the quality of life and the psychological health of retirees during their retirement. Retirees might consider taking steps such as expanding their social circle, engaging in moderate exercise, working to maintain a positive mindset, and developing their personal interests.