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S’poreans least optimistic about retiring early, among others in Southeast Asia

retirement singapore

The pandemic has forced people around the world to rethink their retirement plans. Owing to trends such as digitalisation and a change in employee attitudes, the job market was forever altered. Now, with the horizon showing signs of a global recession, it seems as if the worst is yet to come.

Over the past year, Singaporeans have been putting more thought into their future. In a survey by Fullerton Fund Management, it was revealed that 42 per cent of locals in their 30s viewed the pandemic as a key trigger, causing them to re-evaluate their attitude on retirement.

The importance of being financially prepared has become readily apparent, and many believe that a traditional source of retirement income — such as the Central Provident Fund (CPF) — is no longer enough.

A majority of Singaporeans between the ages of 21 and 40 now expect that most of their retirement income will come through investment returns. In light of this, the average risk tolerance levels have also been evolving.

Among the younger population, more have become willing to forgo guaranteed capital in favour of higher speculative returns.

Singapore vs. SEA: Investment choices

In June 2022, Milieu Insight released data surveying people across Southeast Asia about the Financial Independence, Retire Early (FIRE) movement.

Introduced in the 1990s by writer Vicki Robin and financial analyst Joe Dominguez, FIRE is a movement dedicated to living below one’s means and investing more — all to fund an early retirement.

On the topic of investing, the survey revealed that Singaporeans viewed investment funds, real estate, and gold as the most desirable options. That said, the rising propensity for risk was also showcased — a quarter of local respondents planned to invest in cryptocurrencies, and over half planned to buy stocks.

singapore retirement planning investments
Image Credit: Milieu Insight

Although this is a significant proportion, Singapore placed well below the Southeast Asian average for each of these categories.

In comparison to those in neighbouring countries, Singaporeans take a risk-averse approach to investing. While this might boil down to a difference in mentality, other factors could also play a role. For example, the ease of access to financial instruments.

In countries such as Indonesia and the Philippines, over half of the population is unbanked. In Singapore, this figure is less than two per cent. Investments such as cryptocurrencies might prove more attractive for those who can’t participate in traditional finance.

Are Singaporeans confident about retiring early?

Among the countries surveyed, Singapore had the lowest proportion of respondents who claimed that they were on track to retire early. Over 50 per cent said that they planned to do so, but didn’t find it likely to happen.

When comparing the steps being taken towards retirement, Singaporeans were less likely to do financial planning or take on a second job for additional income.

singapore early retirement survey
Image Credit: Milieu Insight

On the other hand, they expressed more interest in investing in insurance plans and taking advantage of credit card points programs. The latter might be yet another implication of having easy access to traditional finance in the country.

When asked about the lifestyle they would lead in retirement, less than a quarter of Singaporeans believed that they wouldn’t have to alter their standard of living. Most envisioned a more minimalist lifestyle, sustained through a combination of savings and part-time work.

How much do Singaporeans save?

Given the pessimism around early retirement, it’s surprising to see that Singaporeans save the highest proportion of their income among those around Southeast Asia.

Three out of 10 Singaporeans save over 30 per cent of their income, as compared to an average of two out of 10 for the rest of Southeast Asia. This doesn’t include the amount which is further used for investments or insurance.

The difference in cost of living between Singapore and other Southeast Asian countries adds some context around this discrepancy.

When accounting for factors such as average income and living expenses, Singapore ranks among the 10 most expensive countries to live in. Indonesia and the Philippines barely make the top 100.

As such, Singaporeans need to save more than their Southeast Asian counterparts to be able to retire and continue living in the country.

Resigning or retiring?

Among these concerns about retirement, Singaporeans face a challenging dilemma: to work at jobs they dislike, or continue working into their older years.

In April 2022, Prudential Singapore commissioned a poll surveying the impact of the ‘Great Resignation’ on retirement planning.

The respondents comprised residents who had recently left their jobs or were actively thinking of doing so. One in five of them believed that such a decision would push their retirement back by six years.

Asked about the reasons why they wanted to leave, half the respondents said that they no longer felt engaged at work. Others expressed concerns about mental health and toxic work environments.

Regardless of the decision employees make, it’ll certainly leave something to be desired.

Featured Image Credit: CPF

Also Read: S’pore sees a serious talent crunch – jobs remain unfilled despite 120% increase in listings

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