How to stop worrying about retirement and start planning

There is a certain irony at the heart of retirement planning. Most people spend their working lives anxious about not saving enough. Then, when they finally arrive at retirement, they are often too afraid to spend—leaving money unspent, and experiences unlived, in the name of prudence.

Bill Perkins captures this tension well in his book, Die With Zero, presenting a case against the instinct to save indefinitely. Perkins describes how retirees move through three phases: in the early, active years of retirement, the "go-go" phase, energy levels are high and the appetite for travel, adventure, and new experiences is strong. The "slow-go" phase follows, where health begins to shape or even limit what is possible. Finally, the "no-go" phase brings a quieter existence where the pleasures of life shift inward—family, comfort, and routine.

The implication is uncomfortable but worth sitting with: some experiences are best enjoyed now, not later. Saving obsessively and spending on hardly anything is essentially a waste of money, Perkins writes.

But his argument, compelling as it is, leaves an important question unanswered: how do you spend without worry if you do not know whether you have enough?

This anxiety is not irrational—the cost of living rises year by year, and none of us knows for sure how long we will live.

Why do we never feel there’s enough?

Based on statistics by the Census and Statistics Department, median monthly employment earnings for the overall workforce are overall steadily growing around 3.5% annually. While income growth often aims to outpace Consumer Price Index (CPI) inflation, we still hear many Hong Kongers lament the rising cost of living.

It’s harder to feel the ground under our feet

In his 2026 annual letter to investors, Chairman of BlackRock, Larry Fink, wrote that today’s economic anxiety comes from “a deeper feeling that capitalism is working—just not for enough people.” Mass layoffs and AI disruption paint a sobering picture of today’s job insecurity. Neither is the financial reward of employment always proportionate to the time and effort one gives.

Fink presents an unfiltered view of reality: “the vast majority of wealth has flowed to people who owned assets, not to people who earned most of their money by working.” His words are a poignant reminder that investing is non-negotiable today—in fact, it is the only way to accumulate enough wealth so that we do not outlive it.

Outliving our wealth is a real concern

Longevity risk impacts all of us, and we should all be worried about it. As of 2024, Hong Kong’s life expectancy at birth is 82.7 years for males and 88.2 years for females—a continuation of a gradual upward trend and among the highest in the world.

Meanwhile, the average annual CPI inflation in Hong Kong right now is 1.7%. Assuming a steady average inflation rate over the next 25 years, a 35-year-old with HK$400,000 in annual expenses now will need approximately HK$610,000 to maintain the same standard of living at 60. While average income tends to grow faster than inflation during our working years, the pressure comes when we wonder if our accumulated wealth can carry the full weight of rising costs at retirement.

A sound retirement income plan must address two related questions. First, income: in the absence of a salary, how do you ensure a stable, predictable source of cash flow to sustain your lifestyle? Second, capital: what strategy preserves, and ideally grows, the pool of wealth that finances this income, so that it does not run out before you do?

How to plan for retirement, and for peace of mind

The bare minimum: Beat inflation

Emergency savings—typically three to twelve months of living expenses—should sit in a bank account for accessibility. 

However, being cash-heavy has its costs too. A basic savings account at major Hong Kong banks offers a very low nominal interest rate, often around 0.001% per annum for HKD savings and 0.01% for USD savings, which means cash is being eroded by inflation. Lower risk financial instruments like fixed deposit and money market funds and shorter duration bonds offer liquidity while growing your cash.

Tip 2: Spend as you build wealth

Retirement planning does not mean deferring all enjoyment until you stop working. The key is to separate your wealth into pots based on when you need the money, and invest each pot accordingly.

Taking travel plans as an example: for a regional trip to Asia within the next one year, investing your savings in a low-risk portfolio keeps them on a steady, gradual growth. For a Europe tour in five years’ time, you can afford to take on slightly more risk for potentially higher returns. And for retirement, which may be decades away, a longer time horizon means you can ride out market volatility and invest more aggressively for growth.

This goal-based approach also brings discipline to how you deploy your money, so your near-term spending plans and long-term retirement savings are not competing with each other.

Top 3: Secure a retirement foundation with MPF and Annuities

For Hong Kongers, the Mandatory Provident Fund (MPF) and local annuity schemes are key components of retirement planning, mainly due to two features: 

• Mandatory savings, invested for growth. Both employees and employers are required to contribute to the MPF, making it the foundation of retirement saving in Hong Kong. Investing those contributions in well-diversified, low-cost funds allows the money to compound steadily over decades — which is why starting early and staying invested matters. For those who want to do more, Tax Deductible Voluntary Contributions (TVC) let you top up your MPF while reducing your tax bill.
• Insurance against outliving your savings. The HKMC Annuity Plan — a government-backed scheme funded through the Exchange Fund — converts a lump-sum premium into guaranteed monthly income for life. Unlike drawing down from a fixed pool of savings, this type of publicly-guaranteed annuity removes the risk of running out of money, no matter how long you live. 

Note: The HKMC Annuity Plan is only available for Hong Kong permanent residents aged 60 or above.

Tip 4: Plan your decumulation strategy

The transition from accumulation to decumulation is not as simple as "start spending what you saved".

Decumulation is about strategising which pool you draw from first, how much, and when. One of them is a bucketing strategy that apportions your retirement by time horizon to minimise sequencing risk. For instance, a retiree may create three buckets of wealth:

1. Bucket 1: Covers three years’ worth of their expenses, held in cash, money market funds, government bonds or other low-risk investments.
2. Bucket 2: For use in the next 3–7 years, and is meant to replenish Bucket 1 when it has been depleted. The majority of it is allocated to defensive assets like bonds for modest growth, and possibly some allocation to equities for growth.
3. Bucket 3: Primarily for longer term growth, and similarly, meant to replenish Bucket 2 when it has been sold down. With a longer time horizon, short-term market volatility typically has a muted impact. Hence, higher allocation towards risk assets, like stocks, may be preferred.

Clearly demarcated buckets of wealth can give more clarity on how much you can spend at retirement, and a peace of mind that it continues to grow for future needs. Taking a simple, yet still structured approach can allay anxieties of running out of retirement savings. 

"But, what if there is a market downturn just as I retire?"

This is one of the most common concerns in retirement planning, also called sequencing risk. A market decline early in retirement—when you are simultaneously drawing down—reduces the principal sum, which has knock-on effects on your portfolio.

There are a few mitigation strategies:

• Maintain a one-to-three-year cash buffer you draw from during downturns, letting your portfolio recover without forced selling.
• If you are more risk averse, reduce exposure to market volatility by selecting an annuity that covers a meaningful share of essential monthly expenses. 
• Ensure your retirement portfolio is globally and sectorally diversified to spread risks.

What if inflation is higher in retirement than I planned for?

While MPF portfolios and fixed annuities may provide a stable, guaranteed monthly income, you will need additional strategies to protect against potentially higher long-term inflation. Within an investment portfolio, risk assets, including equities, are typically the main driver of growth. An appropriate allocation to equities, based on personal risk tolerance and time horizon, gives your wealth a better chance to beat inflation. 

What if my portfolio does not grow as fast as projected?

Look beyond headline returns and scrutinise your investing fees. Just like returns, fees compound over time. Keep investment costs low, avoid overactivity (i.e. frequent trading), ensure returns are commensurate with the risk you take, and revisit your financial plan regularly to ensure it keeps pace with your goals.

What if I need to stop working earlier than planned?

Early retirement may or may not be voluntary or expected, which is why early planning is important. The compounding effect of investment returns gets more pronounced with time—take advantage of it so that you are financially prepared for curveballs.

What if I am already in my 50s and have not yet started?

Starting late is better than not starting at all. A 50-year-old still has a 15-year runway before the typical retirement age. Take advantage of options such as Tax Deductible Voluntary Contributions (TVC) to your MPF, which can efficiently boost your retirement savings while providing immediate tax reliefs.

You may also wish to speak to our SFC-licensed financial advisors for personalised guidance on building an investment portfolio that can complement your MPF contribution to help you reach your retirement goals.

The bottom line

Retirement anxiety is, in part, a logical response to genuine uncertainty. None of us knows exactly how long we will live, how costs will evolve, or how markets will behave. However, having a proper retirement plan helps us to live better, now and later.

Take a systematic approach: build a stable foundation of guaranteed, lifelong income through a government-backed annuity plan, supplemented by an investment portfolio, sized and structured to sustain your desired lifestyle across all phases of retirement. The strategy is not to obsess over every dollar of savings. It is to live well—and to do so with enough confidence in your finances that you actually can.

With Endowus, you can plan and manage your money by investing in institutional-grade portfolios, curated by our Investment Office, that offer globally diversified exposure using Best-in-Class underlying funds as building blocks. 

You can start with our pre-populated Flagship and Satellite portfolios and either take the template as is or tweak the portfolio allocations to suit your personal risk appetite, preference, and goals. 

For investors looking for a locked-in fixed return, our Fixed-Rate Savings offers returns applicable for tenors of 1, 2, 3, or 6 months. Alternatively, a sustainable passive income solution like the Endowus IncomeUp can potentially supplement an annuity or pension payout and offset some of your daily expenses.    

If you are new to Endowus in Hong Kong, you can get started by opening an account with us.

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