Do you have enough to retire early? Singaporeans may have some catching up to do, according to a recent HSBC survey.
The bank’s inaugural Quality of Life report reveals a staggering 74-per-cent perceived gap between current savings and the funds that mass affluent individuals surveyed in Singapore believe are necessary to sustain their preferred retirement lifestyle. This could explain why nearly 6 out of 10 Singaporeans surveyed plan to work past official retirement.
The report also indicates that mass affluent individuals1 in Singapore estimate they need US$936,000 (about S$1.3 million) for a comfortable retirement, reflecting both the financial goals and aspirations of a demographic seeking stability and fulfilment in their post-working years. Yet, as many as one-third of Singapore respondents admit they do not have a comprehensive plan for retirement.
The survey assessed quality of life across nine markets, such as Singapore, the US, Hong Kong, China and Malaysia. It also examined how physical and mental wellness correlates with financial stability, highlighting the importance of financial planning in achieving retirement and legacy planning goals.
Below are some key data points from the report that shed light on retirement preparedness of Singaporeans.
Why it is important to plan for your retirement
Q&A with Ashmita Acharya, Head of Wealth and Personal Banking, HSBC Singapore
Q: What led HSBC to commission this report?
A: The last few years have brought about dramatic changes that have significantly impacted people’s lives. We live in a post-pandemic world where high interest rates and inflation are pervasive. There’s a shift in the workforce as baby boomers retire and millennials make up the majority of the global workforce.
There is an increased focus on health and awareness of personal mortality, which has transformed consumers’ attitudes and life priorities.
Hence, we wanted to explore the concept of a good quality of life across different generations of affluent individuals in nine markets.
Q: What surprised you about the findings, and why?
A: Only half of the mass affluent in Singapore feel prepared for retirement, falling below the global average. They are concerned about the cost of living and inflation. They also fear not having saved enough for a comfortable retirement.
This is despite the fact that mass affluent Singaporeans rated themselves higher on financial fitness. However, not many have taken the extra steps to optimise their wealth for the longer future. While “planning for retirement” is one of their top financial goals, one-third of them do not have a comprehensive plan for retirement. Singapore respondents rely mainly on personal savings as their number one source of wealth, but there are other ways to grow wealth.
Q: What should people consider when planning for their retirement?
A: The first thing to do would be to understand your goals and financial situation, differentiating between needs and wants, and assessing your risk appetite.
Set and prioritise long-term financial goals, whether they involve vacations, home ownership indulging in hobbies. Evaluate your current financial status to determine saving and investment strategies towards these goals.
Regular savings and consistent investment, despite market fluctuations, are key. Review and rebalance your portfolio annually and adjust it based on changes in goals and risk tolerance. It is important to review the level of protection you need in order to be financially independent, especially in case of death or disability of a key income earner, and to cover medical costs and long-term care. At the same time, seek professional financial advice, compare opinions and utilise online tools for budgeting and savings planning. Remember, managing finances is insufficient; proactive planning is essential for a comfortable retirement. Knowledge is power. Our goal is to equip our customers with the financial tools and resources as they work towards financial well-being and build financial resilience.
Q: Why is there a strong link between the financially fit and mental wellness?
A: While money can’t buy happiness, we’re acutely aware that financial security can improve peace of mind. The findings from the Quality of Life report confirm this, with those who rate themselves as financially fit being 4.3 times more likely to score above average on the mental well-being scale.
Financial literacy builds confidence in making financial decisions – a critical component of the journey towards greater financial well-being and resilience.
Footnotes:
The data is taken from the HSBC Quality of Life report. Visit here to view the full report.
1with investable assets of US$100,000 to US$2 million
Disclaimer:
This material is for information only and not meant to be relied on for any investment or advisory purposes nor is it an offer by HSBC Bank (Singapore) Limited of any products or services. It is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. The specific investment objectives, personal situation and particular needs of any person have not been taken into consideration. Before you make any investment decision, you may wish to seek advice from a financial consultant before making any investment decisions. If you choose not to do so, you should consider whether the investment is suitable for you.
