A] Prelude *
As most of our clients are based in the EU/USA/UK, we believe it can be interesting to see (early) retirement perspective in Singapore.
* For more information about pension systems, investments and social security in general, feel free to visit our dedicated webpages:
https://expatpensionholland.nl/global-pillars-systems
https://expatpensionholland.nl/global-social-security-coverage
https://expatpensionholland.nl/global-investments-risks-0
B] The Numbers
Most Singaporeans (81%) aspire to retire between the ages of 50 and 70 with younger generations, including millennials (71%) and Gen Z (71%), aiming for retirement at 60. 75% of Singaporeans have prioritized planning for retirement, typically starting at age 35, according to the Etiqa Insurance Singapore Retirement Insights Report 2024.
Among younger Singaporeans, most millennials (75%) and Gen Z (69%) are confident that they will achieve their retirement goals. These generations anticipate requiring less than S$6,000 per month to sustain their retirement plans with 57% of millennials and 74% of Gen Z expressing this sentiment.
These findings highlight Singaporeans’ awareness of the need for a robust retirement plan as the cost of living and inflation rates continue to rise. However, with many starting later in life and underestimating the funds needed to achieve their goals, there is a need to balance early retirement with the realities of financial planning.
“While it is heartening to see more Singaporeans take proactive steps towards preparing for retirement, many still underestimate the time horizon and funds needed to sustain their desired lifestyle. This could lead to a potential retirement gap,” said Raymond Ong, CEO of Etiqa Insurance Singapore.
“It is key that Singaporeans start saving early and invest wisely. They should factor in the impact of inflation on their retirement savings, make necessary adjustments over time and ensure they have protection in place for unexpected events, such as accidents and medical issues, that could derail their plans. This proactive approach is essential to help them maintain their desired standard of living in their golden years,” added Mr. Ong.
C] Priorities Younger Singaporeans
Younger Singaporeans, including millennials and Gen Z, also adopt a conservative approach to retirement planning, with the survey also revealing their preference for low-risk financial instruments, with savings accounts (Gen Z: 61% / Millennials: 65%), CPF contributions (Gen Z: 56% / Millennials: 54%), and fixed deposits/savings bonds (Gen Z: 44% / Millennials: 52%) as their top financial tools to fund their retirement.
While this cautious approach might have been useful in capitalizing on the high-interest rate environment of recent years, younger Singaporeans are encouraged to rethink their retirement strategy in today’s uncertain economic environment to grow potential investment returns, increase their ability to accumulate sufficient retirement funds and leverage the power of compounding over time.
The report reveals that 33% of the seniors wish they had saved more consistently and aggressively. By learning from the experiences of older generations, younger Singaporeans can consider adopting a more proactive and growth-oriented investment approach to better secure their financial future. (While never going beyond their personal risk profile.)
The desire to secure the next generation’s financial future is evident among younger Singaporeans, with 78% of millennials and 68% of Gen Z prioritizing wealth transfer as part of their financial goals. While this desire to secure both their financial future and that of the next generation is good, it can inadvertently exacerbate the retirement gap for younger Singaporeans should it take precedence over their own financial security.
D] Other Key Aspects
• 25% of Singaporeans have yet to start retirement planning. Top reasons include prioritizing immediate financial needs (38%), reliance on CPF savings (34%) and insufficient savings (30%).
• 33% of seniors and 30% of Gen X acknowledge that consistent and aggressive saving could have significantly increased their retirement funds over time.
• 41% of Singaporeans consider investment as a key retirement strategy but 33% of those who invest lack confidence in their approach. Those lacking confidence in investing cite fear of losing money (57%), insufficient financial knowledge (53%) and high risk (45%) as their main concerns.
• Healthcare needs and expenses remain a key focus in Singaporeans’ retirement planning, particularly for seniors (63%) and Gen X (51%), who are acutely aware of the costs associated with ageing. Additionally, insurance coverage is becoming a significant focus in retirement planning, with about 38% of Singaporeans prioritizing it.
E] Finally
It is important to recognize that there is no one-size-fits-all approach to retirement planning. Seeking professional advice from a financial advisor can provide invaluable guidance in creating a retirement plan that aligns with your specific goals and risk tolerance.
By understanding your unique needs and preferences, you can develop a retirement strategy that ensures a comfortable and fulfilling future.