Many people in Singapore unsure if retirement nest egg is big enough

Office workers at Raffles Place on Feb 18, 2015.
Office workers at Raffles Place on Feb 18, 2015. ST PHOTO: DANIEL NEO

SINGAPORE - Most people know that they need to plan for retirement but are unsure if their nest egg is sufficient. Given a second chance, they would have started planning and saving when younger.

This stark reality was uncovered by two polls conducted by The Sunday Times Invest with DBS Bank on the last two Sundays and Mondays.

Slightly more than half or 52 per cent of the 762 respondents in the first poll said they have started planning for their golden years but that it may not be enough.

 

Of those, 8 per cent said they had left it too late and will start now, while 4.2 per cent said they cannot make ends meet.

On the bright side, however, 35 per cent or about 270 are confident of retiring well.

Most of the respondents opt for a myriad of asset classes for their investments, including unit trusts, stocks, insurance and property. About 26 per cent invest in unit trusts and stocks while about 20 per cent have purchased insurance.

Only one in 10 uses the Supplementary Retirement Scheme (SRS) to enjoy tax savings and grow their retirement funds, which shows that there is room for greater penetration.

The SRS is a national voluntary scheme set up in 2001 to incentivise individuals to save consistently for retirement while also enjoying tax benefits.

In the survey, 38 per cent of respondents say that an average return of 1 per cent to 4 per cent a year is typically achieved, while about 30 per cent are able to garner a higher average return of 4 per cent to 8 per cent a year. About 3 per cent managed to get more than 12 per cent a year.

The top concern facing retail investors is not having enough sources of passive income, followed by outliving one's savings, and inflation. About 6 per cent worry about having to rely on family and friends when they retire.

In the second poll of 416 respondents, about 30 per cent said they are happy with their planning while four in 10 wished they had started planning and saving when they were younger.

About 20 per cent wished someone had shown them the way, and about one in 10 said they should have spent less and saved more.

This finding presents opportunities for financial advisers to reach out to these people and provide the necessary advice. Individuals are also encouraged to step up their cash management skills and financial literacy so as to make informed investment decisions.

Underlining the need to plan for retirement instead of leaving it to chance, an overwhelming 83 per cent of retired respondents said they consciously planned and saved for their golden years.

For this group of people, just under half said they should have enough savings to last their retirement, while about 21 per cent say they need to continue working past 62. About 12.5 per cent say they do not have enough savings and 17.3 per cent say they are unsure.

About 46 per cent rely on a combination of investment dividends and annuity plans, retirement savings, Central Provident Fund savings and family, to fund their golden years.

A version of this article appeared in the print edition of The Sunday Times on November 01, 2015, with the headline 'Many people unsure if retirement nest egg is big enough'. Print Edition | Subscribe