After decades of arduous work, the average middle-class Hong Kong family is ready for retirement. With housing prices still high, it is difficult for a middle-class family to maintain its living standard without a net asset value of at least HK$13 million.
Otherwise, its living standard will inevitably decline.
Upon retirement, the average middle-class family owns a two-bedroom apartment with an average market value of HK$6 million. To maintain a more affluent lifestyle, monthly expense of HK$20,000 is essential. Based on this calculation, their expense over the next
30 years will be HK$7.2 million, requiring a total net asset value of HK$13.2 million to sustain their retirement life.
While this goal is easy for the wealthy middle class, it is more challenging for the average middle class. On retirement, this middle-class family may only have HK$2 to HK$3 million current assets, coupled with a two-bedroom apartment without outstanding mortgage. In total, an average middle class family owns less than nine million net assets value. Owning such assets, the retirement life in Hong Kong is a challenge.
Under these circumstances, the number of average middle-class families moving north to retire is expected to increase.
If a middle-class family sells its own unit and cashes out six million, along with its liquid assets, its total assets would be 8 to 9 million.
If such a typical family chooses to relocate to Shenzhen, it could keep its monthly expense under HK$ 15,000, allowing its family to enjoy a living standard comparable to Hong Kong monthly expense up to forty to fifty thousand dollars.
If they think it is still too high, they could move to Zhuhai, Zhongshan, or Huizhou by reducing their monthly expenses HK$ 7,000 to 9,000. These expenses were equivalent to HK$ 100,000 annually. This significant reduction in monthly expenses would allow the average middle-class families to travel 8 to 10 times annually.
With the integration of mainland China and Hong Kong, relocation or retirement to northern China is unavoidable. Traditionally, middle-class retirees would apply to underwrite reverse mortgage being provided by Hong Kong Mortgage Corporation, but it could only provide a fixed income of about 10,000 dollars per month to the successful applicant. With this meager fixed income, their living standard would unsurprisingly decline. For smart middle-class retirees, they will sell their self-use properties while the property
price gap between mainland China and Hong Kong remains significant. Once they sold their properties, they could head north to explore the new frontier in the vast China.
