The prospect of doting on grandchildren and traveling together hand in hand is a beautiful vision for most people’s future retirement life. Of course, for many young people, supporting the elderly is an issue that will not come for decades, seemingly a rather distant topic.
In reality, however, supporting the elderly has already become an increasingly severe social problem, because contrary to developed countries in Europe and America which grow "rich before old," China is a typical "old before rich" type country. The current situation of population aging and the long-term inability of enterprise basic endowment insurance to cover costs determines that social security pensions can only satisfy the lower-level pension needs of a portion of people.
The pension problem 30 years from now
Moreover, the pressure of supporting the elderly will be particularly prominent among the "post-70s" and "post-80s" generations. Most of them are single children; their limited income not only has to bear the heavy responsibility of raising children and supporting both sets of parents, but also continuously "contributes" to the rapidly developing Chinese real estate market.
It can be foreseen that, thirty years from now, when this group enters the ranks of retirees, relying solely on traditional savings and social security pensions will be far from enough. According to predictions by experts from Allianz Life Insurance Company Limited, a person around 30 years old who lives and works in Shanghai, assuming their current monthly pure living expenses are 2500 yuan, would need about 6000 yuan at the age of 60 to maintain a similar quality of life. This does not include medical expenses for oneself, one's parents, or in-laws, nor does it include travel, red envelopes, and other social expenditures.
Perhaps some people might say, I pay social endowment insurance fees every month, so there will be no worries when I retire in the future. As we all know, the pension deducted from our monthly salary falls under the category of social basic endowment insurance, which is a legally mandated pension insurance system implemented by the state to ensure basic living needs after retirement. According to introductions by senior personnel studying social security issues, if one completely relies on basic pensions, retirees can only maintain a middle-to-lower standard of living, meaning they can eat well and stay warm, but have little disposable income. Therefore, if one wants to ensure a higher quality retirement life, relying solely on social basic endowment insurance is far from enough.
Early planning for retirement
So, when should one consider the issue of retirement? The opinion of financial management experts from Allianz Life Insurance is that one should plan as early as possible; the earlier one invests, the higher the returns.
Perhaps numbers can explain this issue. Assuming Mr. Han, currently 30 years old, plans to purchase insurance as part of his retirement plan, he has two options: one is to start investing 10,000 yuan annually starting now, continuing until he is 50 without adding more capital, but allowing the accumulated funds to continue being invested until retirement; the second is to start investing ten years later, also investing 10,000 yuan annually, continuing until retirement at 60. Calculating with an annual investment return rate of 5%, it can be found that by the time he is 60, the accumulated funds would be 538,600 yuan and 330,600 yuan respectively, with a difference of over 208,000 yuan. Clearly, if one wants to reserve sufficient retirement funds, it is best to start preparing as early as possible, preferably not later than 45 years old, otherwise it may be too late.
Significance of insurance for retirement
Then, how should one plan for retirement? Reasonably utilizing financial management tools can effectively alleviate the pressure of retirement.
Nobel Economics Prize winner James Tobin had a widely praised investment saying, "Don't put all your eggs in one basket." Reasonable asset allocation can diversify risks, combining the advantages of various financial management tools, ensuring a cash flow for daily life while guaranteeing a decent medium to long-term return.
Among various retirement financial management tools, the most common ones are bank savings and bonds, which are safe and can be flexibly accessed, but offer low returns; stocks appear to offer high returns, but come with very high risks, generally not recommended as the main component of retirement planning.
Among many financial management tools, insurance has special significance for retirement. Insurance not only provides comprehensive protection for various stages of life, ensuring that unexpected events do not significantly affect the quality of life for families and individuals, but also allows for steady appreciation of assets through mid-to-long term planning and operations by actuaries and risk managers.
In a complete retirement financial management portfolio, insurance is undoubtedly the solid foundation. With this "ballast stone," one can more freely conduct other investments without worry. Insurance itself has a certain rate of return and also serves as a "semi-compulsory savings," avoiding uncertainty in fund usage and ensuring dedicated use. More importantly, when unexpected events occur, only insurance can quickly provide an insurance payout much larger than the investment amount to solve urgent problems. Moreover, for populations with a tendency towards longevity within their family members, choosing lifetime payment-type endowment insurance can achieve the effect of living longer and receiving more, something other financial management methods cannot provide.
Proper proportion of commercial endowment insurance
After saying all this, it still needs to be emphasized that the pension obtained through purchasing personal commercial endowment insurance is just an important part of the entire retirement plan. Don't forget that we also have social basic pensions, enterprise annuities, and other personal investments such as property and fund returns. After all, although insurance products have stable long-term returns, they are relatively limited and have certain limitations.
Therefore, when choosing an insurance plan, one should fully consider the current income level and combine it with daily expenses, future life expectations, inflation, and other factors to make reasonable choices. Experts suggest that the supplementary pension obtained from purchasing commercial endowment insurance should account for 15% to 40% of future total retirement expenses, and should not be entirely invested in insurance products, in order to reserve a high-quality future for oneself.