Have You Started Your Retirement Planning? 54% Of Middle-Aged Singaporeans Have Not
When it comes to planning for retirement, most of us would’ve heard that we need to start early.
But, a survey study by St. James’s Place Asia (SJP Asia) found that 54% of Singaporeans aged between 45 and 64 have not started planning for retirement! And… 55% of those surveyed have not accounted for inflation in their financial planning. 😲
These numbers are… alarming considering we’re always bombarded by the importance of planning for retirement.
So, why is this happening?
Let’s find out!
TL;DR: Reasons Why Singaporeans Have Not Started Planning For Retirement
SJP Asia Study’s Research Methodology
The wealth management conducted 2,780 online interviews with respondents from Singapore (1,420) and Hong Kong (1,360). All respondents were aged 25 to 64 years old and those who held personal investments in stocks, property, shares, funds etc. and were from households with a minimum annual income of S$70,000 to over S$250,000.
Retirement Planning Becomes Harder Due to COVID-19
The pandemic has severely impacted the world and created lots of uncertainties, and retirement planning is no less affected.
The study also finds that 67% of the Singaporeans of ages 45 to 64 are more concerned about their ability to pay for medical expenses in their retirement since the pandemic started.
As a result of uncertainties, 72% of the Singaporeans surveyed have made lifestyle adjustments in the hopes of having a better retirement, and 48% of these respondents needed to draw down or reduce their retirement contributions due to immediate financial issues caused by the pandemic.
For the uninitiated, Singapore has increased its retirement age to 63 this year, and this number will increase to 65 by 2030. The average life expectancy of a Singaporean is 83.5 years.
Surely, if we retire at 65 years, we still have 20 years or so to spend in retirement, and there are knowledge gaps here that we’ll need to address below.
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Not Understanding Financial Products And Services
Unsurprisingly, the survey reported that 57% of Singaporeans did not fully understand the financial products and services for retirement.
A similar report by OCBC late last year also reported that while close to half of Singaporeans have used financial tools to manage their personal finances, most of them are still unable to project their longer-term needs for retirement, hence they’ve underestimated the amount they need by 31%.
I’m guilty of this as well.
Before joining Seedly, I didn’t feel equipped to plan my retirement nor my parent’s retirement.
At Seedly, we aim to bridge the knowledge gap and build financial literacy among Singaporeans. As new products and services are launched in the market, the lesson here is to keep learning and learning.
Wealth Transfer & Succession Planning Strain Family Relationships
Interestingly, 63% of Singaporeans of this age group shared that they don’t know how to manage intergenerational wealth transfer.
Also, 65% of them are unaware of potential tax implications.
Wealth planning may be a difficult topic to broach since money is often a sensitive topic.
If you’ve watched enough tv dramas, you will know that money is often a source of family disputes, and this can actually make retirement planning stressful for some.
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How to Start Planning For Retirement?
When we talk about retirement, the first thing that often comes to mind is always… the Central Provident Fund (CPF).
But, even so, do you know how to leverage your CPF accounts and interest rates?
For working Singaporeans, this is the cornerstone for funding their retirement.
When you reach 55, a Retirement Account (RA) will be created for you. The savings from your Special Account (SA) and/or Ordinary Account (OA) up to your Full Retirement Sum (FRS) will be transferred to your RA to form your retirement sum.
How Much Money Do You Need To Retire in Singapore?
While working Singaporeans are required to contribute to our CPF accounts, not all Singaporeans are required especially Self-Employed Persons.
We estimated that Singaporeans need to save about $400,000 to retire at 55 years old in Singapore, but this is in the context without inflation and with the assumption that your investment will beat inflation every year.
In general, you should be saving at least $1,361 per month if you’re 25 years old this year, and at least $2,032 per month if you’re 45 years old this year.
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Retirement planning is definitely something we should not overlook, and require lots of planning ahead.
It’s good to establish your financial goals early so that you’ll be able to work towards achieving them earlier.
Suffice to say, start as early as you can so that you can enjoy the fruits of labour during your golden years.
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Share your thoughts with the Seedly Community today!
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