Asia is ageing faster than anywhere else, but only a fraction of the population is financially prepared for their retirement years, according to a recent report.

Notably, 99% of the respondents across eight Asia-Pacific markets report fearing retirement, but only 24% have a written retirement plan, finds McKinsey & Company’s report, entitled Asia’s 75-point gap: Moving consumers from retirement angst to action. This 75-point gap between awareness and action represents a wide-open opportunity for insurers and wealth managers.

The gap stems from a misalignment between current product offerings and actual consumer need, the report argues, with five out of six current product holders citing lack of inflation protection, flexibility or care cover.

Five shifts insurers need to make to close the gap are building an integrated retirement platform, enrolling customers across their lifecycle, replacing product complexity with outcome clarity, engaging customers through emotional connection, and aligning advisor incentives with long-term client outcomes.

The report’s key findings include:

• Consumers underestimate what they’ll actually need: Only 11% of pre-retirees expect to need the approximately 70% income replacement rate generally required to maintain living standards; 43% are planning for just 30% to 50% of current income.
• Health anxiety outweighs financial anxiety: Health-adjacent worries – losing independence, unaffordable care, becoming a burden to family and not having anyone to rely on in old age – account for 60% of top concerns, 21 points above pure financial worries, holding across all eight markets. Nearly 30% of consumers say they want combined health and wealth retirement solutions – a product category that is still in its infancy across the region.
• Inflation is the industry’s biggest product market misfit: Lack of inflation protection is the top reason for dissatisfaction ( 26% ) and CPI-adjusted payouts are the most desired feature ( 31% ). An “affordability trifecta” – low payouts, high premiums, inflexibility – drives most complaints.

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Singapore’s long-term care ( LTC ) gap exists despite maturity. Even in one of the region’s more developed LTC markets, only around a third of citizens over 30 have private LTC coverage to supplement the government’s CareShield Life scheme, indicating that even mature markets remain underserved.

Japan, South Korea and Taiwan have the most accurate expectations about retirement needs. These “super-aged” markets have the highest share of respondents who correctly expect to need around the 70% income replacement benchmark – 30% in Japan, 22% in South Korea and 18% in Taiwan.

China’s retirement income expectations diverge most from the 70% benchmark. China has the region’s largest working-age population and is the fastest-ageing major economy, yet only less than 10% of younger respondents expect to need 70% income replacement.

Malaysia and Thailand share a similar pattern to China among younger respondents, also in the single to low-double digits for expecting the 70% benchmark.