Three phases of retirement for the affluent

First, they cut back on working hours; then, they focus on travel and leisure; and finally, they prioritise relaxation and time spent with family

The affluent in Singapore and Hong Kong increasingly view their retirements as "a new lease on life", according to a recent UBS survey.

The high-net-worth individuals surveyed generally saw retirement in three distinct phases, instead of one continuous phase.

The first involves cutting back on working hours in their 50s to 60s, the second phase focuses on increasing travel and leisure activities in their 60s to 80s and the last phase prioritises relaxation and spending time with family in their 80s to 90s.

Some 430 investors from Singapore and Hong Kong were surveyed in the first quarter of this year, with each investor having at least $250,000 in investable assets. About 43 per cent of them had more than $1 million in such assets.

The survey found that apart from travel and leisure activities, people saw retirement as a chance to start new businesses, although their reasons for doing so differed.

Men in Singapore said they mainly start a business to "leave behind a legacy", while women start a business to "increase yearly returns", expecting proceeds of their business to support them in retirement.

Men in Singapore said they mainly start a business to "leave behind a legacy", while women start a business to "increase yearly returns", expecting proceeds of their business to support them in retirement.


Survey results showed that throughout all three phases of retirement, stocks came in top as the type of investment more than half of respondents would hold, followed by real estate and cash.

In contrast, women in Hong Kong who start businesses save more for retirement precisely because they want to hedge against their businesses failing.

Even so, UBS noted that as both male and female investors got older, the emphasis on starting a business to increase yearly returns decreased while the focus on leaving behind a legacy increased.

And although respondents generally viewed retirement as consisting of three different phases, they continued to plan for it and invest as if it were one continuous phase.

Survey results showed that throughout all three phases of retirement, stocks came in top as the type of investment more than half of respondents would hold, followed by real estate and cash.

UBS noted that the "common strategy of allocating more than half of retirement savings to stocks may leave investors unprepared as their needs change during the three phases of retirement".

"During their 50s to 60s, when there is often an income stream and good health, investors can and should rely on a larger portion of higher-yielding but also possibly less-liquid assets such as stocks or real estate," said Mr Hartmut Issel, head of equity and credit for Asia-Pacific at UBS Wealth Management.

He explained that as the investors approach their 80s to 90s, higher health expenses would have to be taken into account, and there would also be less work income.

"Thus, investors would rely on a smaller portion of the former assets and rely on higher portions of cash, or at least liquid income-generators such as bonds."

A version of this article appeared in the print edition of The Sunday Times on April 24, 2016, with the headline 'Three phases of retirement for the affluent'. Print Edition | Subscribe