SINGAPORE - Media OutReach - 7 July
2021 - AIA
Singapore today unveiled that young families in Singapore have deprioritised
planning for their retirement because they are spending at least 2.5 times more
of their monthly expenses on their children's needs rather than taking charge
of their own retirement planning. Parents spend almost 20% of their income on their children but less than 7% on their own retirement
planning. 70% also said they intend to either maintain or increase the amount
of income allocated to their children's expenses.
The average RQ score for Singaporeans is 55%, and 40% of surveyed
Singaporeans scored below 50 - an indication that retirement preparedness has
room for improvement.
studies conducted among 1,000 and more members of the general population of Singapore
in January 2021 and June 2021 respectively, the leading life insurer identified
three factors driving these financial priorities among young families:
- A lack of financial understanding has led to the over-reliance
on bank savings. For 92% of Singaporeans, bank deposits are the most
popular savings instruments, while 21% supplement their bank savings with investment
tools. Nearly 1 in 3 Singaporeans' savings was negatively impacted in 2020. Singaporeans
use at least 3 tools to manage their savings, with a median amount of between
S$251-S$500 set aside monthly for retirement.
- Savings priorities tend to be more short term focusing on family needs
and emergency spending instead of longer term goals like retirement. In terms
of savings goals, emergency spending is the top priority (64%), followed by
ensuring financial security for the family (56%). Among young families with
kids, 76% intend to leave an inheritance for their children, but only half have
started planning for it.
- The nest egg required to maintain a desired
retirement lifestyle is increasingly expanding, but most are underestimating
the amount needed. Singaporeans have one of the longest life
expectancies in the world at 84.8 years.
On average, Singaporeans plan to retire at 60 years old, which will require at
least 25 years of retirement income. Close to half of respondents want to maintain their current lifestyle
after retirement, but more than two-thirds (66%) underestimate the actual
retirement amount needed by S$967 per month. Among families with children, the
underestimated amount is slightly higher at S$1,020 per month.
As a simple rule of thumb, monthly income is recommended to be spilt using
Allocate the first 50% of one's take-home income pay on necessities such as
housing, food, and transport. The remaining half should be split up between 20%
for long-term savings and investments and with 30% for "wants" like hobbies and
travel. However, research shows that Singaporeans are 13% below the target for
their retirement planning.
Melita Teo, Chief Customer and Digital Officer, AIA Singapore, said, "Retirement
planning is an essential part of securing our longer term financial security,
not just for parents, but for the entire family, so everyone can look forward
to a brighter future with peace of mind."
recognise this is not an easy balancing act, especially amid growing financial
insecurity as a result of COVID-19. Many also fear becoming a burden on their
children later on in life. As part of AIA's brand promise of enabling
Singaporeans to live healthier, longer, better lives, we want to help people better
manage their financial priorities when preparing for their golden years. We are
committed to continuously innovating our suite of customisable solutions with
the goal of ensuring that a golden retirement is within reach for Singaporeans,
no matter the circumstances," added Ms. Teo.
to endemic COVID-19: The shortfall between expectations and reality of
retirement is widening
March 2020, the AIA Retirement Quotient (RQ) survey showed that 54% of Singaporeans were 14-years short when it comes to adequately
planning for their retirement, when compared to the national average life
expectancy of 84.8 years old. While most Singaporeans have started planning for
their retirement, 70% felt underprepared.
retirement goals have taken a backseat. COVID-19 uncertainties further
necessitated the shifting of savings allocation towards their children and
shorter-term needs such as emergency funds instead of themselves.
Average intended retirement age was 58.8 years old
Average intended retirement age widened to 60 years old
Median value set aside for retirement each month was S$251 – S$500
Median value set aside for retirement each month remains the same at
S$251 – S$500
Expected monthly expenditure during retirement was S$1,500
Expected monthly expenditure during retirement is now S$2,000
For young families with kids,
the expected amount is slightly higher: S$2,100
- Retirement no longer means stepping away from
work entirely but is an opportunity to pursue hobbies and passion projects.
- Three in five Singaporeans plan to reduce their workload or switch
careers upon retirement. Only 38% intend to cease work altogether. 49% intend
to continue working reduced hours and 13% want to switch career paths entirely.
- 91% fear income loss and job instability. 95% think
the economic fallout of the pandemic will last beyond the second half of
- While close to half of respondents want to
maintain their current lifestyle, an equal percentage also expect a much
simpler lifestyle during their retirement.
doubt a result of COVID-19 uncertainties as well as changing attitudes towards retirement,
the retirement goals consumers are setting today have also become more modest.
Most of these goals are still pegged almost exclusively to financial health and
do not consider other aspects of wellness.
the pandemic had accelerated the need to save more, Singaporeans' focus,
however, has been on short-term savings for their emergency and family needs,
with little regard for their retirement, even though they are expecting an
increase in their monthly expenditure during retirement. Their mindset still
remains, which is worrying as they are still setting aside the same S$251 to
S$500 median value for their retirement
each month, while expecting to maintain their current lifestyle when they
retire, while not forgetting the inflation rate which would affect how much
your retirement dollars will really be worth in the future.
our desired retirement is not limited to being financially prepared, Singaporeans
need to look beyond just their finances if they intend to truly enjoy their
golden years. To help them on this journey, besides continuing to study the
gaps in Singaporean's retirement readiness, we have also developed a tool to
help Singaporeans take a more holistic approach to retirement. By considering
all aspects of retirement preparedness, we are empowering our customers to let
their aspirations drive the structure of their retirement plans, rather than allowing
their current finances dictate their future," added Ms. Teo.
A holistic approach to retirement preparedness
is an issue of national importance in Singapore, home to one of the most
rapidly ageing populations in the world.
It is estimated that by 2030, one in four people will be aged over 65 years
old, and by 2050, the number is expected to increase to almost one in two.
Despite the urgency of the situation, many of the retirement products available on the
market only cater to financial and health preparedness and do not account for
the emotional, mental, and social aspects of retirement.
AIA Singapore in partnership with Ipsos developed a Retirement
Quotient (RQ) – an indicator to measure Singaporeans' retirement readiness and
guide them on a more holistic retirement planning journey. The RQ is made up of
four distinct pillars to guide Singaporeans to achieve their golden retirement:
financial preparedness, health preparedness, social support, and trust in
preparedness remains the biggest but far from the only determinant of
retirement preparedness. Financial preparedness is determined by the following
attributes: having in place a clear financial plan that allows one to achieve
their desired retirement lifestyle, and being confident in having made
sufficient financial preparations to accumulate enough wealth to account for
the vast majority of Singaporeans opt to confide in a partner or spouse about
their plans for retirement, one in five Singaporeans do not share their
retirement plans with anyone. RQ respondents who scored poorly in the social
support pillar tended to receive low scores throughout. The second largest
pillar of retirement preparedness, the positive impact of social support
indicates that retirement is not just a personal decision and that having
deeper conversations with loved ones, whether they be family, dependents, or friends,
contributes significantly to retirement preparedness.
health alone cannot drive retirement preparedness, but it enhances individual
retirement preparedness when coupled with robust financial planning. In terms
of health, 59% of Singaporeans said that reducing the risk of illnesses was the
primary motivator to keeping fit as opposed to enjoying their later years
(41%). Of the 59%, married couples and families cited wanting to avoid
financially burdening their loved ones as the reason, while others were keen to
avoid depleting their nest eggs on additional healthcare costs.
Trust in Institutions
trust comprised the smallest pillar, low scorers for this section tend to be
the least prepared for retirement, are not financially-savvy, and have little
access to professional advice from established financial institutions including
banks and insurers.
prioritise their children, almost 70% of young parents with children do not
want to burden them and other family members and friends financially during
retirement. However, the irony is that those who are facing a shortfall in
their retirement planning might have to rely on their children for retirement
eventually. Hence, as parents prepare their children and give them the best for
their bright future, they should also consider proper retirement planning for
themselves to avoid burdening their children during their golden years.
the gaps ahead of one's golden years and
having a trusted partner are crucial elements in attaining a well-rounded retirement.
AIA Singapore is committed to journeying with Singaporeans to help them be
financially prepared by offering a comprehensive suite of innovative products and
tools, while also inspiring them to lead healthier lifestyles. AIA Singapore's aim
is to ensure everyone can have the financial freedom to live their desired
retirement and be in pink of health to enjoy their golden years with their
more information on AIA's comprehensive retirement proposition, please visit: https://www.aia.com.sg/retirement
spend almost 20% of their income on their children's needs, encompassing education
and saving for their children's future.
 AIA Save
Smarter Study 2021 surveyed general consumers across eight markets – Hong Kong,
China, Thailand, Malaysia, Vietnam, Indonesia, Philippines, and Singapore – in
January 2021. AIA360 Retirement Study 2021 surveyed 331 customers in Singapore
in June 2021.
 The AIA
Retirement Quotient (RQ) survey studied 1,000 members of the general Singapore
population mid-March 2020.
 According to
findings from the AIA Retirement Quotient (RQ) survey conducted in mid-March
 According to
findings from AIA Save Smarter Study 2021, AIA360 Retirement Study 2021, and
AIA Health Matters Survey 2021 conducted in June 2021.