Reality of comfortable retirement concerns much of China's workforce

At north of 1.3 billion, China is the world's most-populated country with India in a not-so-far distant second. It's also one that's aging. By 2050, approximately 33 percent of Chinese will be 60 years or older.

At this rate, you have to wonder how people from China are preparing for retirement, and furthermore, if they believe that they'll have the financial means to call it quits from their 9-to-5 rituals when the time comes. Based on a new survey, the majority of workers have their suspicions they won't have enough.

Over half - 53 percent - of full-time employees in China aren't confident they will ever be able to compile the necessary funds to last them the length of their retirement years, according to a recent poll conducted jointly by the Society of Actuaries and LIMRA's Secure Retirement Institute.

Women in China must retire by 50

"About 1 in 8 people in China are over 60."

Similar to the United States, the typical age at which people from China retire varies, depending on gender. However, unlike the U.S., most workers in China are required to leave the labor force by a certain age. Presently, about 16.1 percent of the population is over 60, according to the National Bureau of Statistics, but the ratio is expected to swell to 1 in 3 in 35 years or so.

Yet despite these realities, most of China's workforce is concerned about how they'll handle finances when they're no longer working for a living.

Lauren Finnie, associate analyst of international research at LIMRA, said there really isn't one thing that's made retirement savings the broad-based source of anxiety for so many. It's been multiple factors.

"A combination of mandatory retirements and increased longevity pose real threats to China's pension system," Finnie explained. "As a result, today's workers express more uncertainty about retirement."

Somewhat similar to the United States, China affords workers a social pension system that provides fixed sums of money to retirees collecting. The problem revolves around the ratio of people collecting versus those paying in, the LIMRA report cited.

Furthermore, life expectancies have lengthened. Based on data the report cited from the World Bank, the average lifespan in China is 75. In 1966, the average was 54. In short, not only are more people drawing on pensions, but they're using it for longer stretches.

This requires residents to make up the difference by saving, but the study found many people in China are behind the eight ball in this respect. Interestingly, however, compared to the rest of the world, the average family in China devotes a larger percentage of earned income to savings at 30 percent, based on figures the report cited from the World Bank.

"When we looked at retirement planning activities and attitudes among Chinese consumers, we found definite similarities with consumers in the U.S.," Finnie referenced.

Some of the commonalities included both U.S. and China residents nearing retirement engaging in at least one kind of retirement planning program, as well as making calculations on how much money they'll need to retire comfortably, the study found.


The average household in China puts 30 percent of earned income to savings. The average household in China puts 30 percent of earned income to savings.

China may raise required retirement age
There have been indications that China may increase the mandatory retirement age, perhaps due to drains on its pension system. Yin Weimin, China's minister of human resources and security,

"1 in 3 Americans anticipate Social Security being a major source of income in retirement."

recently stated that whether this happens won't be decided until some time next year at the earliest, according to The Wall Street Journal.

"There is currently no societal consensus on this issue," Yin explained at a recent parliamentary meeting.

Peoples' opinions run the gamut in the U.S. as well on what age is the best age, or even if they'll retire. Of those who intend to, approximately 33 percent expect to use Social Security as a significant source of income, based on a survey conducted by Gallup.

Those who can draw from several sources are traditionally more favorably positioned. Leveraged Planning® Solutions is one such wellspring. For more information on how Leveraged Planning® Solutions can provide the fuel to your retirement goals, speak with a Global Financial Distributors Advisor. 

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