Even though Singapore’s population has one of the world’s longest life expectancies, only 27% of Singapore investors say they only have basic concepts of retirement planning to support their retirement living, according to Fidelity International’s Asia Pacific (Apac) investor study. The study focuses on investors across Hong Kong, mainland China, Taiwan, Singapore, Japan and Australia.
While Singapore investors aim to retire early at age 61 with the expectation of supporting themselves for 18 years from their pension and savings, the study found that most will face a four-year gap in their retirement income shortfall given the average life expectancy of 83 years.
When it comes to retirement planning, Fidelity’s latest study found that 41% of Singapore investors have started planning, rising only to 64% for the 45 - 69 age group. In comparison, younger investors seem to be paying attention to the importance of early retirement planning, with 19% of under 30s having started already and 27% having seriously considered it even if they have not yet begun.
According to the study, Singapore investors expect to be able to spend an average of $5,300 per month in retirement, which accounts for 68% of their current monthly income. About 80% of Singapore investors consider covering their daily costs as the most important financial need in retirement, followed by having an emergency fund for medical treatment (71%) and affording leisure and travel (66%).
Interestingly, 21% of Singapore investors ranked leaving a legacy as the lowest priority when it comes to retirement planning.
“It is important to have a sense of urgency and take ownership of the process when it comes to planning for your future,” says Sabrina Gan, head of Southeast Asia and country head of Singapore at Fidelity International. “The key to effective retirement planning is to start by identifying your financial goals.”
Additionally, the study found that investing is a significant part of retirement planning as individuals are likely to benefit from taking a long-term approach and investing consistently throughout their working life, also known as the accumulation phase. This approach generally allows individuals a greater probability of achieving their goals, according to Fidelity International.
However, 57% of Singapore investors are concerned about not having enough for retirement because of losses from investments, while 54% are concerned about being forced to retire before they plan to do so. About 34% of investors fear they may have an income shortfall for their retirement due to time off for family duties or maternity leave.
In response, 44% of Singapore investors indicate that they will look to plug the gap by reducing their expenses, with the same percentage indicating that they will continue to invest throughout retirement. About 40% of Singapore investors say they will work part-time during their retirement, while 31% say they plan to invest till they retire. About 30% of investors in Singapore will increase their current savings plan while 30% will work for a longer period of time.
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When asked for their top priority in choosing investment products post-retirement, the study found that 59% indicated that generating stable monthly income was the number one choice, followed by capital appreciation at 24%. Just 16% said that their top priority was to guarantee no capital loss.
The recent study also found that the expected investment return for those surveyed was 6.1%, which Fidelity finds unrealistic given that the most popular financial product post-retirement is the fixed deposit (47%), followed by stocks and bonds at 46% and 45% respectively.
“The survey results suggest that Singapore investors tend to focus on what they have more control over to help increase their income in retirement, such as reducing expenses, working for longer, and topping up savings,” says Gan.
“But these methods, while important, can only go so far as cost of living goes up. To achieve your retirement goals, it is important to steadily grow your assets while controlling your costs,” she adds.
