MORE Singaporeans now believe they can survive financially for at least half a year if they lose their jobs, according to the latest survey by insurance group AIA.

The latest wage data showed that a quarter of the total workforce earns $1,200 a month or less. With basic expenses such as food costs still on the rise, saving for a rainy day is a slow and difficult process.

Six out of 10 respondents said they can get by for six months or longer on their savings, insurance payments and money from family and friends, up from 55 per cent in last year's poll.

Experts said this was probably due to the economic boom last year, which allowed people to top up their savings and put them to good use in investments.

But if the economic malaise persists and people find themselves out of a job for a year or longer, fewer of them will have enough to ride out the slump, AIA noted.

Its Life Matters Index, which polled 1,217 people aged 18 and above, found that only 32 per cent felt they could pull through more than a year of unemployment on their savings. This figure was down from 39 per cent last year, and the lowest since AIA started conducting the annual survey in 2004.

Given that this year's study was carried out in June and July, the pessimism may be even higher now, as the global economy has taken a sharp turn for the worse since then.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, pointed out that the latest wage data showed that a quarter of the total workforce earns $1,200 a month or less. With basic expenses such as food costs still on the rise, saving for a rainy day is a slow and difficult process.

Also, recent media reports have said that more HDB flat owners are falling behind on mortgage payments, he added.

'That is the biggest item of expenditure for most Singaporeans, and if they have problems paying this even before the recession has really started, it's no wonder people are feeling a bit down,' Mr Leong said.

Another reason for growing pessimism is that Singaporeans' savings have been eroded by sky-high inflation over the last year, which has eased only slightly in recent months despite the economic slowdown.

'With rising inflation over the past year, funds that have been set aside for the long term may now manage to last for only less than a year,' AIA said.

Its survey also revealed that Singaporeans are increasingly worried about having enough money to retire.

Just a quarter of respondents said they would be able to sustain themselves through retirement, down from more than a third last year. This is because the number of Singaporeans who own annuities and other retirement plans is still very low, said AIA.

'Income protection and retirement planning are clearly lacking among Singaporeans, although they are aware of their importance, particularly in the current economic turmoil,' concluded AIA's executive vice-president and senior regional life executive Kenneth Juneau.

Still, it is not all doom and gloom. Financial planners said having two years' worth of expenses saved up is not entirely necessary.

They typically tell clients to set aside emergency funds for only three to six months, as it is unlikely they will need to draw on savings for more than a year.

'If you have enough to cover your expenses for up to a year, that is very prudent already,' said Mr Christopher Tan, chief executive of financial advisory firm Providend. 'In fact, it's not wise to keep so much in cash, because your money ends up being eroded in the bank.'

fiochan@sph.com.sg