Skip to main content Accessibility help
×
×
Home

Perceived retirement savings adequacy in Hong Kong: an interdisciplinary financial planning model

  • KEE-LEE CHOU (a1), KAR-MING YU (a1), WAI-SUM CHAN (a2), ALFRED M. WU (a1), ALEX Y. F. ZHU (a1) and VIVIAN W. Q. LOU (a3)...
Abstract

Using an interdisciplinary model of financial planning, we investigated the factors contributing to perceived adequacy of retirement savings among Hong Kong workers by replicating a previous study of American and Dutch workers. The model was also tested for age differences in the way in which the variables operated within the model. These questions were examined using data from a phone survey conducted with 999 Hong Kong workers in 2012. We examined three psychological factors (future time orientation, goal clarity and financial knowledge), three social support variables (early learning from parents, spousal support and friend support) and three institutional factors (quality of employer pensions, trust in banks and fund managers, and trust in the government), as well as retirement savings planning activity and perceived retirement savings adequacy. Path analyses were used to test the model for the whole sample and separately for younger (N=437) and older (N=562) workers. Although a few age differences were found in the path analyses, the model was found to be useful in explaining the factors contributing to retirement savings planning and practices. Finally, we discuss how our findings differ from those of prior studies, and we assess their theoretical and practical implications.

Copyright
Corresponding author
Address for correspondence: Kee-Lee Chou, Department of Asian and Policy Studies, The Hong Kong Institute of Education, 10 Lo Ping Road, Tai Po, New Territories, Hong Kong. E-mail: klchou@ied.edu.hk
References
Hide All
Adams, G. A. and Rau, B. L. 2011. Putting off tomorrow to do what you want today: planning for retirement. American Psychologist, 66, 3, 180–92.
Agree, E. M., Biddlecom, A. E. and Valente, T. W. 2005. Intergenerational transfers of resources between older persons and extended kin in Taiwan and the Philippines. Population Studies, 59, 2, 181–95.
AXA 2005. AXA Retirement Scope: Retirement, a New Life After Work? Results for Hong Kong, with International Comparison. AXA, Hong Kong.
Banks, J. and Oldfield, Z. 2007. Understanding pensions: cognitive function, numerical ability and retirement saving. Fiscal Studies, 28, 2, 143–70.
Benartzi, S. and Thaler, R. H. 2007. Heuristics and biases in retirement savings behavior. Journal of Economic Perspectives, 21, 3, 81104.
Bernheim, B. D., Garrett, D. M. and Maki, D. M. 2001. Education and saving: the long term effects of high school financial curriculum mandates. Journal of Public Economics, 80, 3, 435–65.
Beutler, I. and Dickson, L. 2008. Consumer economic socialization. In Xiao, J. J. (ed.), Handbook of Consumer Finance Research. Springer, New York, 83103.
Burtless, G. 2006. Social norms, rules of thumb, and retirement: evidence for rationality in retirement planning. In Schaie, K. W. and Carstensen, L. L. (eds), Social Structures, Aging, and Self-regulation in the Elderly. Springer, New York, 123160.
Census and Statistics Department 2001. General household survey. Special Topics Report 27, General Household Survey Section, Census and Statistics Department, Hong Kong.
Census and Statistics Department 2012. Hong Kong Population Projections 2012–2041. Demographic Statistics Section, Hong Kong Special Administration Region Government Printer, Hong Kong.
Chan, S. and Stevens, A. H. 2003. What you don't know can't help you: pension knowledge and retirement decision making. Working Paper 10185, National Bureau of Economic Research, Cambridge, Massachusetts.
Chen, M. K. 2013. The effect of language on economic behavior: evidence from savings rates, health behaviors, and retirement assets. American Economic Review, 103, 2, 690731.
Cheng, S. T. and Chan, A. C. 2006. Filial piety and psychological well-being in well older Chinese. Journals of Gerontology: Psychological Sciences, 61B, 5, 262–9.
Chou, K. L. 2010. Number of children and upstream intergenerational financial transfers: evidence from Hong Kong. Journals of Gerontology: Social Sciences, 65B, 2, 227–35.
Chou, K. L., Chow, N. W. S. and Chi, I. 2004. Preventing economic hardship among Hong Kong Chinese elderly. Journal of Aging and Social Policy, 16, 4, 7997.
DeVaney, S. A. and Zhang, T. C. 2001. A cohort analysis of the amount in defined contribution and individual retirement accounts. Financial Counselling and Planning, 12, 1, 89102.
Duflo, E. and Saez, E. 2003. The role of information and social interactions in retirement plan decisions: evidence from a randomized experiment. The Quarterly Journal of Economics, 118, 3, 815–42.
Ekerdt, D. J. and Hackney, J. K. 2002. Workers’ ignorance of retirement benefits. The Gerontologist, 42, 4, 543–51.
Ekerdt, D. J., Hackney, J., Kosloski, K. and DeViney, S. 2001. Eddies in the stream: the prevalence of uncertain plans for retirement. Journals of Gerontology: Psychological Sciences and Social Sciences, 56B, 3, S16270.
Grable, J. E. and Lytton, R. H. 1997. Determinants of retirement savings plan participation: a discriminant analysis. Personal Finances and Worker Productivity, 1, 1, 184–9.
Henkens, K. 1999. Retirement intentions and spousal support: a multi-actor approach. Journal of Gerontology, 54B, 2, S6373.
Hershey, D. A., Henkens, K. and Van Dalen, H. P. 2007. Mapping the minds of retirement planners: a cross-cultural perspective. Journal of Cross-cultural Psychology, 38, 3, 361–82.
Hershey, D. A., Henkens, K. and Van Dalen, H. P. 2010 a. Aging and retirement planning: interdisciplinary influences viewed through a cross-cultural lens. International Journal of Aging and Human Development, 70, 1, 138.
Hershey, D. A., Henkens, K. and Van Dalen, H. P 2010 b. What drives retirement income worries in Europe? A multilevel analysis. European Journal of Ageing, 7, 4, 301–11.
Hershey, D. A., Jacobs-Lawson, J. M., McArdle, J. J. and Hamagami, A. 2007. Psychological foundations of financial planning for retirement. Journal of Adult Development, 14, 1, 2636.
Hershey, D. A., Mowen, J. C. and Jacobs-Lawson, J. M. 2003. An experimental comparison of retirement planning intervention seminars. Educational Gerontology, 29, 4, 339–59.
Holzmann, R., Palacios, R. and Zviniene, A. 2004. Implicit pension debt: issues, measurement and scope in international perspective. Social Protection Discussion Paper Series, Social Protection Unit, World Bank, Washington DC.
Howlett, E., Kees, J. and Kemp, E. 2008. The role of self-regulation, future orientation, and financial knowledge in long-term financial decisions. Journal of Consumer Affairs, 42, 2, 223–42.
HSBC 2006. The Study on Retirement Issues in Hong Kong. HSBC, Hong Kong.
Hu, L. T., and Bentler, P. M. 1999. Cutoff criteria for fit indexes in covariance structure analysis: Conventional versus new alternatives. Structural Equation Modeling, 6, 1, 155.
Hyde, M., Dixon, J. and Drover, G. 2007. Assessing the capacity of pension institutions to build and sustain trust: a multidimensional conceptual framework. Journal of Social Policy, 36, 3, 457–75.
Kemp, C. L., Rosenthal, C. J. and Denton, M. 2005. Financial planning for later life: subjective understandings of catalysts and constraints. Journal of Aging Studies, 19, 3, 273–90.
Knodel, J., Friedman, J., Anh, T. S. and Cuong, B. T. 2000. Intergenerational exchanges in Vietnam: family size, sex composition, and the location of children. Population Studies, 54, 1, 89104.
Kuijs, L. 2006. How will China's saving-investment balance evolve? Policy Research Working Paper, International Monetary Fund, World Bank, Washington DC.
Lee, W. K. and Kwok, H. 2005. Differences in expectations and patterns of informal support for older persons in Hong Kong: modification to filial piety. Ageing International: Behavioral Science, 30, 2, 188206.
Logan, J. R. and Bian, F. Q. 2003. Parents’ needs, family structure, and regular intergenerational financial exchange in Chinese cities. Sociological Forum, 18, 1, 85101.
Lusardi, A. 1999. Information, expectations, and savings for retirement. In Aaron, H. J. (ed.), Behavioral Dimensions of Retirement. Brookings Institution Press, Washington DC, 81105.
Mees, H. and Ahmed, R. 2012. Why do Chinese households save so much? VoxEU, http://www.voxeu.org/article/why-do-chinese-save-so-much.
Mitchell, O. S. and Utkus, S. P. 2004. Pension Design and Structure: New Lessons from Behavioral Finance. Oxford University Press, New York.
MPF Authority 2012. Mandatory Provident Fund Schemes Statistical Digest, MPF Authority, Hong Kong.
Otto, A. 2012. Saving in childhood and adolescence: insights from developmental psychology. Economics of Education Review, 33, 2013, 818.
Peng, T.-C. M., Bartholomae, S., Fox, J. J. and Cravener, G. 2007. The impact of personal finance education delivered in high school and college courses. Journal of Family and Economic Issues, 28, 2, 265–84.
Roan, C. L., Hermanlin, A. I. and Ofstedal, M. B. 1996. Intergenerational contact and support in Taiwan: a comparison of elderly parents’ and children's reports. Elderly in Asia Report 96-36, Population Studies Center, University of Michigan, Ann Arbor, Michigan.
Siu, A. 2002. Hong Kong's mandatory provident fund. Cato Journal, 22, 2, 317–32.
Social Welfare Department 2013. Annual report of Social Welfare Department, Social Welfare Department, Hong Kong.
Stawski, R. S., Hershey, D. A. and Jacobs-Lawson, J. M. 2007. Goal clarity and financial planning activities as determinants of retirement savings contributions. International Journal of Aging and Human Development, 64, 1, 1332.
Sung, J. and Hanna, S. 1998. The spouse effect on participation and investment decisions for retirement funds. Financial Counseling and Planning, 9, 2, 4759.
Taylor, M. A. and Geldhauser, H. A. 2007. Low-income older workers. In Shultz, K. S. and Adams, G. A. (eds), Aging and Work in the 21st Century. Lawrence Erlbaum, Mahwah, New Jersey, 2550.
Thaler, R. H. 2005. Advances in Behavioral Finance. Volume 2, Princeton University Press, Princeton, New Jersey.
Van Dalen, H. P., Henkens, K. and Hershey, D. A. 2010. Perceptions and expectations of pension savings adequacy: a comparative study of Dutch and American workers. Ageing & Society, 30, 5, 731754.
Wang, M. and Shultz, K. 2010. Employee retirement: a review and recommendations for future investigation. Journal of Management, 36, 1, 172206.
Webley, P. and Nyhus, E. K. 2006. Parents’ influence on children's future orientation and saving. Journal of Economic Psychology, 27, 1, 140–64.
Webley, P. and Nyhus, E. 2012. Economic socialization, saving and assets in European young adults. Economics of Education Review, 33, 2013, 1930.
Wiener, J. and Doescher, T. 2008. A framework for promoting retirement savings. The Journal of Consumer Affairs, 42, 2, 137–64.
Zhan, H. J. 2004. Willingness and expectations: intergenerational differences in attitudes toward filial responsibility in China. Marriage & Family Review, 36, 1, 175200.
Zhou, S. 2012. Explaining the saving puzzles in urban China. The Review of Income and Wealth, 58, 3, 504–30.
Zimmer, Z. and Kwong, J. 2003. Family size and support of older adults in urban and rural China: current effects and future implications. Demography, 40, 1, 2344.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Ageing & Society
  • ISSN: 0144-686X
  • EISSN: 1469-1779
  • URL: /core/journals/ageing-and-society
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed