In focus

Hong Kong investors expect to draw 8.9% a year from retirement savings and not run out of money

Hong Kong investors believe they will be able to withdraw, on average, 8.9% a year from their retirement savings without running out of money, according to a new global study. This is lower than the Asian (10.8%) and global (10.3%) average, but still far higher than long established guidance on how much to take each year to pay an income. In the US, for example, the “4% rule” has been the basis for financial planning in recent decades, although some experts now deem a 4% withdrawal rate to be too high.

These findings were part of the Schroders Global Investor Study (GIS) 2019, which garnered the views of more than 25,000 investors around the world, including 500 investors based in Hong Kong.

Sangita Chawla, Head of Retirement Savings at Schroders, said: “The withdrawal rates look very high around the globe, especially when you consider the lowest rate of withdrawal was a little over 7%. That should really set the alarm bells ringing, particularly when real interest rates are negative in developed markets. And while real rates have been higher in some emerging economies, these rates have been falling as well.

“So why are investors being so bullish? It could be that too many people are underestimating how long they might live. Consider that global average life expectancy for 65-year-olds has risen from 80 to 82 in the past decade, according to United Nations data. Although this differs from men to women, and is likely to increase further in the future, it’s the less developed countries that are ageing most rapidly.

“It’s also possible that people are being more bullish about the amounts they plan to withdraw because they have other sources of income or wealth to rely on.

“These factors aside, it’s fair to say to calculate how long savings can last is not an easy calculation, particularly as you need to factor in inflation, fees and the variability of investment returns. We would always recommend seeking professional help from a financial planner or adviser.”

How long will my savings last in retirement?

The “4% rule” emerged in the early 1990s. From retirement savings of $100,000, an investor would draw $4,000 a year, with the withdrawal rate rising with inflation each year. Taking more than this runs the risk of the money running dry within 30 years, according to the rule.

The chart below, based on Schroders analysis, shows the effects of a withdrawal rate of 10.3% on a portfolio.

Consider investing in a portfolio that aims to generate a real return (after inflation) of 4% per year. After allowing for fees of 1% per year, a retiree would run out of savings in ten years.

To cover a more realistic length retirement of around 20 years, an annual return of 10%, after costs and inflation, would be needed.


Source: Schroders. Model assumes a constant inflation rate of 2%. Annual withdrawals of 10.3% of original investment, growing at the rate of inflation. Investment rates illustrated net of fees. Time to ruin illustrated as the number of years before investment is worth zero, without additional contributions. This chart is for illustrative purposes only, and should not be relied upon to predict any possible future performance or when adopting any individual investment strategy

For more on the Schroders Global Investor Study 2019, please visit


*In April 2019, Schroders commissioned Research Plus to conduct an independent online survey of 25,743 investors around the globe. This research defines “investors” as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last 10 years.

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