Manulife’s survey shows Singapore respondents understand importance of retirement saving but only 35 percent have a plan.

 

Singapore consumers can expect to have a long retirement, but as much as they want to save for it, the challenge of accommodating more immediate life priorities in their financial planning means they may ultimately struggle to afford a continuation of their existing lifestyle once they stop working.

Findings from the new Manulife Asia Care Survey 2023 show that nearly two-thirds (63 percent) of Singapore respondents view saving for retirement as their number one personal finance goal, more than anywhere else in the region (average 49 percent). They expect to retire at the age of 62, and with the average life expectancy in Singapore currently at 83.5 years, this means that generating sufficient retirement savings requires planning and, ideally, an early start.

Yet, despite retirement saving being their top personal finance goal, and with a long retirement facing them, only 35 percent have a retirement plan in place, ranging from a quarter of those in the 25-35 age band to 44 percent of those aged 45 and above. It means three in five (65 percent) still needed to put a retirement plan in place when surveyed. Furthermore, only 26 percent said they set aside funds for retirement.

One reason for this low proportion could be the other financial priorities the Singapore respondents have to contend with. They said that saving for a rainy day (44 percent), maintaining their current lifestyle (34 percent), and for medical needs (26 percent) are also important to them, besides retirement saving.

The Manulife survey was conducted with 1,037 Singapore respondents aged 25 to 60 years old who either own insurance or intend to buy.

 

Over-reliance on cash

The respondents’ concerns about personal finance risk are generally in line with elsewhere in the region, but their concerns about the impact of inflation (68 percent) as a threat to their savings goals are above the regional average (64 percent). The other main factors are the risks of economic slowdown (57 percent) and rising healthcare costs (53 percent).

These factors contribute to them not being confident about achieving their financial goals. Just over half said they are confident of saving for a rainy day (52 percent) and maintaining their current lifestyles (51 percent), but less than half are confident about saving fully for retirement (43 percent), purchasing a home (42 percent) or for their medical needs (41 percent).

In Singapore, cash and bank accounts (63 percent) remain the main way to save for retirement, well above the regional average (53 percent). Savings or endowment insurance along with returns and recurring income from non-fund investments (both 20 percent) are a distant joint-second to cash. While the reason for this high reliance on cash was not explored in the survey, this reliance could be due to the perceived ‘safety’ of cash savings. In another question, when asked why the respondents bought insurance, safety and lower risks were cited by 26 percent of respondents.

“As we’ve all seen over the past 12 months, inflation is a risk and cannot be ignored. So, it’s important that whatever savings tools are selected, they must be able to address this type of risk,” said Dr Khoo Kah Siang, CEO, Manulife Singapore. “The over-reliance on cash as a savings tool in Singapore exposes Singapore consumers to inflation risk – inflation eats away at the value of cash savings. So, it’s important to find avenues that offer compounding returns.”

 

Rising healthcare costs are a major concern

Rising healthcare costs are also a major concern in Singapore. Fifty-three percent of the respondents believe healthcare costs pose a risk to their financial goals, more than 10 percentage points higher than the region (42 percent). In addition, the respondents also do not think of themselves as being in particularly good physical and mental health. Only about one in 10 considers themselves to be in good physical and mental health.

That said, respondents are not passive about managing their own health. The three main actions taken to manage health are exercising more (65 percent), eating a healthier diet (60 percent) and self-monitoring their health (52 percent). Despite these efforts, most Singapore respondents (94 percent) said they feel anxious or frustrated in managing their health. Their main concerns centre around money – the potential cost of treatment (49 percent) and potential loss of income or job (42 percent).

It’s notable, however, that three-quarters (74 percent) own at least three types of insurance, a higher percentage than elsewhere in the region (average 70 percent), while more than half (54 percent) intend to buy insurance in the next 12 months.