‘Millennial investors overly upbeat on retirement prospects’

KUALA LUMPUR: A survey on retirement prospects across the ages found that millennial investors underestimate the financial challenges ahead of them.

The Manulife Investor Survey Index (ISI) is done yearly, this time round through 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 years and above who are the primary decision maker on financial matters in the household and have investment products.

The latest survey was conducted between September 2016 and October 2016 by TNS, a leading global research firm.

The Manulife ISI revealed a large generation gap in terms of confidence with millennial investors in Malaysia, defined as investors under the age of 35, more likely to be overly optimistic on their retirement prospects.

The survey shows that investor confidence in future financial security decreases with age, indicating that millennial investors underestimate the financial challenges ahead of them. About 88% of millennials expect they will maintain or enhance their lifestyles in retirement against 72% of respondents aged 35 to 49. Only 12% of millennials expect to have to scale back their lifestyle in retirement but among the middle aged, this figure more than doubles to 28%.

While 61% of millennial investors believe they are either meeting or exceeding their financial goals, 50% of middle aged investors say the same.

The same generation gap is shown when investors were asked if they were irrevocably behind their financial planning: only 4% of millennial investors think they are, but this rises to 11% when middle aged investors were asked the same question.

Despite their general optimism for the future, millennials readily acknowledge that their financial planning for retirement will be challenged by future family and health burdens: 65% expect that their health will deteriorate as they get older and 56% believe it will deteriorate to the point where they can no longer work. Also, 58% of millennials expect that in retirement they will have to financially support their parents while 46% expect to have to financially support their children. Furthermore, 38% expect they won’t receive financial support from their children.

Manulife Holdings Bhd group CEO Mark O’Dell said in a statement that Malaysian millennials are rightfully ambitious for their retirement. However, confidence alone does not make for a good retirement.

“Our vision is to provide strong, reliable, trustworthy and forward-thinking solutions for each of our clients to help them meet their retirement goals. Every investor deserves good advice that will help them prepare for a good retirement,” he said.

Another key point revealed by the survey is that while Malaysian investors across the generations recognise the importance of retirement planning, they would benefit more from education about how best to do it. One-in-five investors (20%) consider retirement their top financial priority.