29 March 2023
SINGAPORE –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%) of Singapore respondents view saving for retirement as their number one personal finance goal, more than anywhere else in the region (average 49%). They expect to retire at the age of 62, and with the average life expectancy in Singapore currently at 83.5 years1, 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% have a retirement plan in place, ranging from a quarter of those in the 25-35 age band to 44% of those aged 45 and above. It means 3 in 5 (65%) still needed to put a retirement plan in place when surveyed. Furthermore, only 26% 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%), maintaining their current lifestyle (34%), and for medical needs (26%) are also important to them, besides retirement saving. For younger Singapore respondents without children, saving to buy a home is a priority (46%), well above the country’s average (21%).
“Most of the respondents in Singapore recognise the importance of saving for retirement, but their other financial needs can get in the way, reflecting the priorities they have to juggle,” said Dr. Khoo Kah Siang, Chief Executive Officer, Manulife Singapore. “But it’s a worry that so few have a retirement plan. Retirement planning must start early so that you have a longer runway to grow your retirement funds. While there are many urgencies in life, it is important to prioritise retirement planning so that you are able to enjoy your golden years, when it comes.”
Macro risks, over-reliance on cash could dent financial goals
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%) as a threat to their savings goals are above the regional average (64%). The other main factors are the risks of economic slowdown (57%) and rising healthcare costs (53%).
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%) and maintaining their current lifestyles (51%), but less than half are confident about saving fully for retirement (43%), purchasing a home (42%) or for their medical needs (41%).
In Singapore, cash and bank accounts (63%) remain the main way to save for retirement, well above the regional average (53%). Savings or endowment insurance along with returns and recurring income from non-fund investments (both 20%) 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% 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. “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, use of insurance to manage risk common
Rising healthcare costs are also a major concern in Singapore. 53% of the respondents believe healthcare costs pose a risk to their financial goals, more than 10 percentage points higher than the region (42%). In addition, the respondents also do not think of themselves as being in particularly good physical and mental health. Only about one in ten 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%), eating a healthier diet (60%) and self-monitoring their health (52%). Despite these efforts, most Singapore respondents (94%) said they feel anxious or frustrated in managing their health. Their main concerns centre around money – the potential cost of treatment (49%) and potential loss of income or job (42%).
It’s notable, however, that three-quarters (74%) own at least three types of insurance, a higher percentage than elsewhere in the region (average 70%), while more than half (54%) intend to buy insurance in the next 12 months.
“The worries in Singapore we see about the impact of health on financial wellbeing are consistent with what we hear from our customers,” said Mark Czajkowski, Chief Marketing Officer of Manulife Singapore. “However, it’s heartening to see that most of the respondents value insurance as an important way to protect themselves from such financial risk, but there is definitely more to do to close the gap. Consumers who are looking for ways to manage health-related financial risks can consider approaching a financial consultant to explore solutions that can help them.”
About Manulife Singapore
Established in 1899, Manulife Singapore provides insurance, retirement and wealth management solutions to meet the financial needs of our customers across their various life stages. Customers can readily access our solutions through our extensive multi-channel distribution network. In addition to our established agency force, we distribute our products through a number of specialist partners, including banks and financial advisory firms. For more information on Manulife Singapore, visit manulife.com.sg.
Manulife Financial Corporation is a leading international financial services provider, helping people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we provide financial advice and insurance, operating as Manulife across Canada, Asia, and Europe, and primarily as John Hancock in the United States. Through Manulife Investment Management, the global brand for our Global Wealth and Asset Management segment, we serve individuals, institutions, and retirement plan members worldwide. At the end of 2022, we had more than 40,000 employees, over 116,000 agents, and thousands of distribution partners, serving over 34 million customers. We trade as 'MFC' on the Toronto, New York, and the Philippine stock exchanges and under '945' in Hong Kong.
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