Singaporeans are putting their longer-term financial plans on the backburner as they prioritise other financial needs such as paying off their debt. More have been able to pay off their home loans and other personal debts on time amid the current high interest rate environment, according to OCBC’s annual financial wellness index, although the move meant that Singaporeans had to start their retirement planning at a later age. The index, which is in its fifth year, recorded its second consecutive dip to an all-time low of 60.
Of the 2,000 working adults in Singapore aged between 21 and 65 years old surveyed in August, 35% of them said that their retirement plans were on track, down from 42% in 2022. The working adults are assessed on 10 pillars of financial wellness, which are based on 24 indicators established by the bank’s wealth management experts. This year, Singaporeans deteriorated on 15 of the 24 indicators.
With the prolonged high interest rate environment, elevated inflation and GST hike, 64% of Singaporean homeowners indicated that they are on target with paying off their monthly mortgage instalments, four percentage points higher y-o-y. Fewer Singaporeans – 28% of the ones surveyed – have unsecured debt like credit card and education loans, down three percentage points y-o-y. Among those who have unsecured debt, 40% are borrowing only what is needed compared to 21% in 2022.
That said, Singaporeans in their 30s were the highest among all age groups surveyed to hold unsecured debt at 35%, up two percentage points y-o-y. They were the only age group to see an increase compared to those in their 20s, 40s, 50s and early 60s. Based on the bank’s findings, the increase could be attributed to people in their 30s spending beyond their means to keep up with their peers. To be sure, 14% of Singaporeans in their 30s indicated that they do this, compared to 12% in 2022. This was the largest such increase among all age groups.
In contrast, fewer Singaporeans in their 40s and 50s are spending beyond their means to keep up with their peers, with a drop of 3 percentage points and 5 percentage points respectively compared to 2022.
On retirement, 79% of the Singaporeans surveyed either do not have a plan or are not on track. This is up from the 71% that indicated similarly in 2022. About only 34% of respondents in their 50s and 60s are on track in their retirement planning, eight percentage points lower y-o-y.
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In addition, the age at which people intend to start planning for retirement has been pushed back, even among older Singaporeans. Those in their 50s said that they intend to start preparing for retirement at 60, which is two years later than what the same group said in 2022. Those in their 20s said they plan to start at 42 on average, a whole eight years later what was said in 2022.
The survey also found that more people are looking at alternative retirement strategies to make up for time. Of those polled, 37% of the people who have not started planning for their retirement said that they would work beyond the official retirement age while 28% are considering retiring overseas where the cost of living is lower. About 9% said that they would rely on their children to support them in their later years.
Lesser Singaporeans – or 42% of them – also said that they have enough funds to meet their family’s financial needs for the next one year, eight percentage points lower y-o-y. While more Singaporeans in their 50s and 60s with dependents had saved enough for this purpose – at 48% and 43% – these groups were also lower with a 14- and 24-percentage point decline y-o-y.
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According to OCBC’s survey, this is most likely due to them being sandwiched between their tertiary institution-going children and ageing parents. In contrast, this year, 31% (versus 41% in 2022) of those in their 20s and 46% (no change from 2022) of those in 30s with dependents had saved enough.
Similarly, 84% of Singaporeans are putting aside at least 10% of their salary, seven percentage points lower y-o-y. The average savings rate – the average percentage of monthly income saved – fell five percentage points, to 25% of one’s monthly income. A larger proportion of Singaporeans also do not have at least six months’ salary as funds to overcome a crisis at 53%, up from last year’s 46%.
In investments, only 79% of the Singaporeans polled say they have investments compared to 85% the year before. The average rate of returns for Singaporean investors was also slashed by half for another year running, to 0.4%, compared to 2022’s 0.7%.
Gen Zs and young millennials had the highest proportion of investors who had loses – 40% of those in their 20s had negative investment returns. Overall, the proportion of Gen Zs and young millennials on track with their investment goals has plummeted from 75% in 2019 to 32% this year. This could be attributed a lack of rigorous research.
Of the investors in their 20s, about 22% of them seek investment-related advice and news only from social media channels and chat groups like TikTok and WhatsApp, which is the highest among all the age groups. Many young investors in their 20s who lost money may not realise they have a blind spot either, with 35% of them actively managing investments on their own, trading daily to profit from short-term price fluctuations.
At the same time, Gen Z and young millennial investors were likely to have been impacted by their international stocks, which have taken a pounding this year. 30% of investors in their 20s invested in such stocks, the highest among all the age groups.
Non-traditional investments such as cryptocurrency and NFTs also fell in popularity in 2023 with 6% of respondents in their 20s investing in cryptocurrency in 2023, down from the 18% last year.
“2023 has been yet another tough year, with the continuation of high interest rates, inflation and turmoil in the financial markets. All of these are reflected in this year’s results, with the index at its lowest since we started in 2019. The silver lining is that Singaporeans are managing their debt better this year and are still saving well. These are virtues that Singaporeans must continue to practise, especially given the challenging outlook,” says OCBC’s head of group wealth management, Tan Siew Lee.
“Another simple step that Singaporeans can take is to understand themselves better. Our survey this year found that personality traits have a bearing on financial wellness. Taking the time to understand what traits they have, and the strengths and weaknesses associated with these traits, is therefore important. Only then can they find the right digital tools and solutions to bridge their shortcomings,” she adds.
