60% of Singaporeans are not prepared for retirement, while 69% feel that they cannot retire comfortably, according to a survey done by digital wealth manager, Syfe, which was published on Wednesday (4 Dec).
The survey, which uses an index developed by Syfe to measure retirement readiness at four levels, showed a huge gap in retirement readiness between Singaporeans; most are either at their highest retirement readiness or at the lowest, reported Today Online.
This trend could be reflecting the widening income gap in the country, the firm stated.
“Left unchanged, it also suggests that retirement inequality will only worsen as people become older with varying levels of savings,” Syfe said.
Using a sample size of 1,000 Singaporeans aged from 25 to 60 years old, the survey measured the retirement readiness based on four factors: their expected retirement lifestyle and needs, current income, accumulated savings, savings rates and investments, and home ownership. Each participant was given a score based on the four levels of retirement readiness: High, adequate, low or very low.
Around four in 10 citizens were found to be grossly ill-prepared for retirement, while about three in 10 were highly prepared. These groups accounted for 66% of the people surveyed.
According to the report, the widening income gap might be the reason why a majority of those polled fell into the two extreme ends. It also stressed that this might lead to a bigger retirement inequality in the future.
The poll also revealed that 60% of Singaporeans are not well-prepared for retirement, while 69% believe that they would be unable to retire comfortably.
Millennials more prepared for retirement?
Millennials, on the other hand, seem to be more prepared for retirement.
Citizens aged 25 to 34 who were polled seemed to be heading for a comfortable retirement, provided that their savings rate and relatively low debt levels are maintained until then.
However, such maintenance may no longer be feasible when they grow older and receive more financial responsibilities.
The participants aged 34 to 35, those who have to take care of older parents and young children, appeared to be the least ready for retirement. This may be due to higher debt levels and lower savings rate compared to other age groups.
“This suggests that youth is a huge advantage when it comes to building wealth for retirement. With fewer financial responsibilities, millennials may find it easier to save more,” said the report.
“To continue staying on course for their desired retirement, millennials should aim to save as much as possible in their 20s and early 30s, and consider investing their surplus savings to fortify their nest egg.”
Survey: Homeowners have lower retirement readiness
The survey also found out that homeowners overall scored lower on retirement readiness than those living in rental homes.
Around 30% of homeowners surveyed had savings of less than 10% of their salary, while their median retirement readiness score was set at the “very low” level.
“These results suggest that homeownership does not guarantee retirement security, especially if an individual is not saving enough for retirement. While a property is usually considered a financial asset in the long term, it is essentially still a liability until its mortgage is paid off,” noted Syfe.
“An individual with most of their retirement savings tied up in property assets could be facing a less-than-ideal retirement since this property wealth does not contribute to retirement income.”
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email firstname.lastname@example.org