MANY Singaporeans risk retiring asset-rich but income-poor, according to a new report by Manulife Asset Management.
Singaporeans have traditionally had a high savings rate, and their combined total wealth is a hefty 2.3 times Singapore's national annual economic output or gross domestic product (GDP).
However, the nest eggs they have tucked away are still insufficient to ensure retirement income security, Manulife says.
Singaporeans may be generally wealthy, with per capita household wealth of about US$205,000 (S$250,000), it adds.
However, about 60 per cent of this wealth is tied up in relatively illiquid assets such as property, or parked in bank deposits which generate little or no income.
Also, Singapore has the lowest level of government social spending among the economies studied by the report. This shifts responsibility for retirement income secu-rity more to individual households.
The report, part of Manulife's Aging Asia series, examined five Asian economies - Hong Kong, Japan, Singapore, South Korea and Taiwan. Mr Michael Dommermuth, president of international asset management at Manulife Asset Management, said one of the reasons Singaporean retirees have been able to retire in relative comfort is strong familial support.
Out of the five economies, elderly Singaporeans received the highest levels of support from their families. Only 8 per cent of elderly Singaporeans live alone, with almost 80 per cent of elderly households receiving financial support from their children.
However, Manulife Asset Management Singapore senior managing director Jill Smith noted that this form of support is unsustainable, given the declining household size, rising elderly dependency ratios and declining fertility.
"It is increasingly important for individuals to allocate their household wealth in ways that generate a recurring income stream," she added.
Most Singaporeans depend on their CPF savings, which Mr Dommermuth said is a very well developed pension scheme.
However, he questioned the actual contribution of pension payments to retirement income security, given that CPF savings can also be used to purchase property and pay for medical expenses.
Additionally, most of the CPF savings are paid out when the CPF member is 55, and many Singaporeans tend to put the bulk of the money in cash deposits.
Mr Dommermuth believed that a lot more awareness and education needed to be done for the retail investor in Singapore and in Asia. "Many of them are very averse to volatility, and they have been through some volatile times in the past," he added.