"Rich and leisure", "sojourn and pension", "wealth freedom" ......On the one hand, there is the other side of the ideal retirement life, and on the other hand, the reality of migrant workers who are struggling to get off work on time. According to the recently released "2023 China Residents' Retirement Readiness Index Survey Report", young people generally expect to retire earlier, especially the average expected retirement age of male respondents between the ages of 18 and 25 is 5881 years old, significantly below the statutory retirement age.
It seems that behind the ideal of early retirement, scientific and rigorous planning is required. As early as 1994, scholars at the Massachusetts Institute of Technology in the United States summarized the 4% rule by analyzing past ** data and retirement cases, which may provide a direction for the pension planning of contemporary young people.
What is the "4% rule"?
The "4% rule" is calculated as follows: the size of assets needed for retirement = 4% of annual expenses after retirement
In other words, early retirement requires 25 times the annual expenditure of assets to be realized. Considering that China's basic pension insurance can provide part of the pension as a guarantee, investors can calculate the funding gap on the road to financial freedom. According to the "Pension Financial Management Questionnaire Report (2022)", 5877% of respondents believe that they need 3,001-8,000 yuan per month to live an ideal retirement life. According to the data released by the Ministry of Human Resources and Social Security in 2021, the per capita pension of retired employees of Chinese enterprises is only 2,987 yuan. Based on the above conditions, we have made a hypothetical calculation: for example, the monthly expenses that Mr. Zhang needs after retirement is 8,000 yuan, and the basic pension insurance can pay 3,000 yuan, then the monthly expenses that Mr. Zhang needs to prepare are 5,000 yuan, which is 60,000 yuan a year, and 60,000 divided by 4% is equal to 1.5 million. In other words, when Mr. Cheung saves enough $1.5 million, it will theoretically be enough to cover his annual living expenses after retirement.
Is the "4% rule" reliable?
Although the 4% rule has made us a good start on the issue of "planning for retirement". However, there are still some preconditions for the "4% rule" to come into effect.
First of all, you need an asset of sufficient size. For the working class, in order to save enough millions of pension money as soon as possible, it is essential to do a good job in financial planning of open source, throttling and investment. On the one hand, in the best period of wealth accumulation, we should strive to improve our vocational skills and improve our income level, and on the other hand, we should establish a correct view of consumption and reasonably plan our monthly expenses, and at the same time, we should start investment and financial planning as soon as possible.
Secondly, the annualized return is guaranteed to be higher than 4%. Considering the decline in real purchasing power due to inflation and the increase in additional expenses such as medical treatment as we age, investors need to ensure that the annualized rate of return on assets is higher than 4%, so that the income generated by the investment covers the expenses, and the investor can continue to obtain funds to meet daily expenses without using the principal. But in the actual operation process, we often find that it is not easy to obtain a long-term stable return of 4%, and the risk and return of investment are often two sides of the coin, which requires us to accumulate pension assets, not only to control the risk to a certain extent, but also to maximize the return on income while ensuring the safety of assets, and to achieve the goal as soon as possible under the long-term persistence of accumulation.
What are the investment implications of the "4% rule"?
Although the "4% rule" is not a panacea for solving the problem of retirement, this formula can bring us some enlightenment when thinking about how to better start the road of retirement life
If we want to achieve pension freedom, the sooner we start to prepare for the pension, the better, and on the premise of taking into account the current quality of life, we can do our best to prepare for the pension assets.
The security and profitability of pension investment are very important, and in the face of high uncertainty in the financial market, we need to rely on the power of professional institutions.
Pension investment is a lifelong thing, from young to retired we have different investment goals, which need to be dynamically allocated from the perspective of life cycle.
Whether it is the accumulation of pensions or the preservation and appreciation of pensions, high-quality pension financial products can help you. In recent years, the public offering industry has actively developed pension goals, and the investment strategy is easy to understand and verifiable, which can be better matched with the risk appetite or life cycle of investors, and has gradually become one of the important choices for personal pension financial management. According to the latest data from the industry association, as of September 28, 2023, there are 161 pension targets that have entered the list of personal pensions. According to wind data, as of November 28, 174 pension target products have been set for Y shares, and the total scale of Y shares has reached 51 at the end of the third quarter8.7 billion yuan.
As a large-scale company controlled by a state-owned commercial bank, ICBC Credit Suisse has always regarded the pension business as one of the focuses of the company's long-term development strategy since its establishment 18 years ago, and is not only one of the few companies in the industry with a full license for pension business, but also has rich experience in pension investment management and customer service, and the scale of pension has continued to rank in the forefront of the market. In terms of personal pensions, ICBC Credit Suisse has a total of six products included in the list of personal pensions, with a share of more than 500 million yuan, all of which rank in the forefront of the industry.
With the advent of the era of longevity, planning for one's retirement money as early as possible is a gift that can stand the test of time for young people who dream of early retirement. It is recommended that investors actively pay attention to personal pension accounts from now on, accumulate wealth through scientific methods, and open up more retirement life possibilities.
Risk Warning: **The word "pension" in the name does not represent income protection or any other form of income commitment, ** does not protect the principal, and losses may occur. The manager manages and uses the property in accordance with the principles of due diligence, honesty and trustworthiness, prudence and diligence, but does not guarantee a certain profit, nor does it guarantee a minimum return. Past performance is not indicative of future performance, and other performance managed by the Manager does not constitute a guarantee of performance. **There are risks, investors should carefully read the "** Contract", "Prospectus", "Product Key Facts Statement" and updates and other legal documents before investing, and choose investment varieties suitable for their own risk tolerance on the basis of a comprehensive understanding of the product situation, rate structure, charging standards of each sales channel and listening to the suitability opinions of the sales agency, and invest cautiously.