Retirement Planning Examples

Ms. Lee is 45 years old, single and does not want to get married. She is a senior manager at a subsidiary of a multinational advertising agency. She loves shopping, going for high tea and traveling abroad. Although she has a monthly salary of 90,000, she often spends it all. She has bags and shoes that can stock an entire boutique, and has traveled around the globe many times, but the balance in her bankbook is embarrassingly low. As she gets older and older, the high-stress job at the advertising agency often makes her want to just quit; when she thinks back to her younger days spending all her money on shopping and traveling, she is filled with regret. Being single, there is only one income in the household; whom can she depend on after retirement? How can she live? All these questions are stressing her out. Is it too late to prepare for retirement now?

According to HSBC's calculations, to reach Ms. Lee's goal to retire at 55 with her current financial situation, she needs to save 124,557 every month; this looks like mission impossible. Hearing this result Ms. Lee regrets not starting to plan earlier.
The expected return, rate of inflation and salary growth for the above case are assumed to be 5.5%, 1.7% and 3.6%, respectively.

Mr. Huang is 30 years old, married with one daughter. He currently has a home mortgage of 3 million. As a high school teacher, his monthly salary is 60,000, and he is the main income earner of the family. Always looking a head of time, he recognized the importance of making a retirement plan early and not long after graduating from university, he started investing 1/4 of his monthly salary in investment-type insurance, took up a 1million dollar life policy, and began monthly investment in mutual funds. Over the years, through his own research and the help of a financial consultant, not only does he review the performance of his investment-type insurance policy regularly, he has also raised the coverage to 3 million to avoid leaving a huge amount of debts to his family in case of an accident. In addition, he bought a capital-repaying insurance policy for his daughter while she was still very young for her future education fund. Mr. Huang and his wife hope to retire at 60, they hope by then their daughter will be independent and they can live a carefree lifestyle in the countryside of Taitung or Hualien.

According to HSBC's calculation, as Mr. Huang has started retirement planning early, he will have accumulated 23,480,788 by the time he is 55. Also, he will have repaid his mortgage by retirement so he can lower the life insurance coverage to 1 million; the above retirement plan can help Mr. Huang stay at the same standard of living as before retirement. After seeing these results, Mr. Huang feels glad that he started planning early so he'll be able to realize his ideal retirement.
The expected return, rate of inflation and salary growth for the above case are assumed to be 5.5%, 1.7% and 3.6%, respectively.

Mrs. Ting, 42, is a full-time housewife; her husband is a senior manager at a large corporation with a good salary and bonuses. They are seen by many as the model couple. As she has seen some of her friends go through divorce, the idea of “you can only depend on yourself” has been in the back of her mind since she was young. Thus, she has been investing the 30,000 leftover from living expenses every month into mutual funds to prepare for retirement since she is 30 years old.

Although she has been preparing for retirement for more than 10 years, she invests in random products only based on hearsay, as she has no experience in investing. Also, once investment is made, she never checks the performance of her investment nor does she see what changes may be needed; she thinks that preparation is all it takes and has left her investments pretty much untouched. One day, she decided to check out how much of a retirement fund she had accumulated, but to her disappointment, it was much less than she had expected! What happened?

An assessment by HSBC showed that although Mrs. Ting had started preparing for retirement early, investing 30,000 per month regularly, her investment lacked planning. She has invested in many high-risk products from hearsay in the hope of chasing high returns; although there have been occasional gains, a number of economic downturns have even negatively affected her capital. So far, she has only accumulated 2.88 million, and by retirement at 60, she is only expected to have 7,549,823. Seeing these results, Mrs. Ting became worried; “I did start early, but why can't I reach my retirement goals?”.

The expected return, rate of inflation and salary growth for the above case are assumed to be 5.5%, 1.7%