The COVID-19 situation has caused a major upheaval in many areas of our lives.
Some of the common areas include:
- Learning to embrace remote working as a new norm, working from home or even from hotels
- Discovering and relating to the word ‘languishing‘ – a sense of restlessness and stagnation
- Reevaluating priorities in life, such as work and purpose
The pandemic has seemingly placed a huge reset button in all our lives, causing us to rethink life’s big questions and question our priorities.
It is therefore not surprising when a study conducted by Fullerton Fund Management showed how COVID-19 has reshaped Singaporeans’ attitudes towards retirement.
This study looked into Singaporeans’ views towards retirement, and it surveyed 1,000 Singaporeans who were aged 21 and above, with minimum monthly incomes of S$3,000 and owned some form of investment.
Some key findings by the study include attitude shifts towards the idea of retirement, and the expectations of top retirement income sources.
Let’s take a look!
TL;DR: Singaporeans’ Views on Retirement: Age To Start Retirement Planning, Top Retirement Income Sources, Expected Retirement Age, and More
| Views on Retirement | Summary | Details |
|---|---|---|
| Age to start planning | 81% of respondents have started financial planning 69% have started retirement planning | Perceived barriers include: Too many financial commitments, lack the monetary capital to do so (Ages 21 to 50) Too late to start (Ages 50 and above) |
| Age to retire at | Singaporeans think they can only retire past their desired age | Younger Singaporeans are more optimistic about earlier retirement |
| Money required for retirement | Estimated average of S$1.4 million | Only 38% are confident of achieving this sum |
| Top retirement income sources | CPF is the top income source, investment returns as a close second | Younger Singaporeans are reducing their reliance on CPF and diversifying their retirement income sources |
When Do Singaporeans Start Planning For Retirement?
With many financial goals ahead of us, retirement planning is usually not on the top of the list when it comes to financial planning.
Individuals usually put off planning for retirement till an age close to retirement, due to saving for more immediate financial milestones such as wedding, housing, and children’s education needs.
This study revealed that on average, 81% have started financial planning, but only 69% have started retirement planning.
A healthy 83% of individuals aged 21 to 30 have begun financial planning, but only slightly above half have started planning for their retirement.
According to the study, there are different perceived barriers to retirement planning.
For those aged between 21 to 30 years old, individuals feel that they lack the monetary capital to do so.
For those aged between 31 to 50 years old, individuals feel that it is an additional commitment (on top of other financial commitments).
For those above 50 years old, most think that it is too late to start.
Age That Singaporeans Think They Can Retire At
With Singaporeans starting retirement planning later, there are also gaps between the desired retirement age and the age individuals think they can retire.
| Age Group | Desired Retirement Age | Age You Think You Can Retire |
|---|---|---|
| 21 to 30 | 57 | 61 |
| 31 to 40 | 60 | 62 |
| 41 to 50 | 62 | 64 |
| 51 to 60 | 64 | 65 |
| 61+ | 70 | 70 |
Singaporeans generally feel that they can only realistically retire past their desired retirement age.
This is no surprise given how retiring early in Singapore may seem like a pipe dream.
As the desired retirement age gradually increases across the age groups, it also shows that the younger generation is slightly more optimistic in earlier retirement.
How Much Singaporeans Think They Need for Retirement
Most Singaporeans are worried about not having enough money for retirement.
Given the cost of living in Singapore and the increase in life expectancy, Singaporeans are mostly not confident of having sufficient retirement funds.
On average, Singaporeans are estimating that they require an average of S$1.4million for the desired retirement lifestyle.
| Age Group | Estimated Retirement Sum Required for Desired Retirement (S$) |
|---|---|
| 21 to 30 | $1.5 million |
| 31 to 40 | $1.8 million |
| 41 to 50 | $1.6 million |
| 51 to 60 | $1.2 million |
| Above 60 | $1.1 million |
Only 38% of the respondents are confident that they are able to achieve this sum, which is quite a worrying statistic.
And this can also be seen as a result of delayed retirement planning.
Top Singaporean Retirement Income Sources
| Age Group | ||||||
|---|---|---|---|---|---|---|
| Top Retirement Income Sources | Total Average | 21 to 30 | 31 to 40 | 41 to 50 | 51 to 60 | Above 60 |
| CPF | 52% | 45% | 35% | 53% | 68% | 62% |
| Investment Returns | 48% | 53% | 53% | 48% | 39% | 46% |
| Savings | 31% | 33% | 22% | 26% | 34% | 42% |
| Endowment Plan / Retirement Insurance | 31% | 23% | 29% | 33% | 38% | 30% |
| Income from Property Rental | 22% | 20% | 31% | 18% | 20% | 19% |
| Supplementary Retirement Scheme (SRS) | 21% | 19% | 22% | 21% | 38% | 18% |
| Working Through Retirement | 20% | 20% | 20% | 19% | 22% | 21% |
Note: Figures do not add up to 100% as respondents are able to choose more than one option
Unsurprisingly, CPF tops the list as the top retirement income source, given how CPF LIFE is an inevitable portion for Singaporeans.
However, this study also revealed that many Singaporeans now do expect their investment returns to help fund their retirement.
More than half of the respondents (53%) from ages 21 to 40 are looking to get their retirement income from their investment returns, as compared to 68% of those aged 51 to 60 who cited CPF as their main retirement income source.
This shows that younger Singaporeans are now reducing their reliance on CPF, and are looking for other ways to diversify their retirement income sources, which includes taking on more risks to generate long-term returns.
Respondents between 21 to 30 years old also have a stronger preference for capital appreciation for their investments, while those aged 31 to 40 years old prefer to have a fixed monthly income.
Which is expected given the longer time horizon the younger ones have to enjoy the power of compounding.
Retiring Early in Singapore: A Possibility or Just a Dream?
This study has provided us some interesting insights into how Singaporeans view retirement.
Retirement is no longer seen as the end of a journey, but more of a new start to pursue life goals and have a renewed purpose.
However, given that most Singaporeans do not prioritise retirement planning, a lot of us are unprepared for the actual retirement, especially given the amount that is required to fund our golden years.
This can be seen as 1 in 5 Singaporeans are expecting themselves to work through retirement.
Which is something that can definitely be avoidable if adequate planning is done while we still can afford to do so.
Now that we know that a huge sum of money is required for us to achieve our desired retirement lifestyle, the more we should start looking at it earlier to be better prepared for our future.
And your future self will thank you for any small steps that you start taking today.
If you’re looking to get any other retirement planning tips, don’t forget to check them out at Seedly!
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