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Are you healthy and wealthy enough to enjoy your retirement to the fullest?
Only about one in 10 Singapore residents consider themselves healthy, reveals survey
On average, Singapore respondents in a survey say they expect to stay healthy only till 61 years old.
PHOTO: GETTY IMAGES
Kareyst Lin, Content STudio
Since turning 40 last year, Ms Jermaine Eh has made significant changes in her life. She eats healthier, drinks less alcohol and works out four times a week.
She is preparing for her next milestone: Retirement.
Ms Eh, 41, aims to “exit any form of full-time work” – including the marketing agency that she currently owns and runs – by the age of 55. Post-55, Ms Eh wants to spend time on passions such as charitable causes and new business ventures.
While she is confident of building a comfortable nest egg for her retirement, money is only part of the equation.
“I want to have a higher quality of life in retirement, not just in material terms, but also health and mental well-being,” says Ms Eh, who is single.
The official retirement age in Singapore is now 63, and will be raised to 65 by 2030.
Her concerns over any ill-health is common among Singapore residents, especially as they are expected to live longer lives. The average male and female life expectancies are 80.7 years and 85.2 years respectively, according to the Singapore Department of Statistics (SingStat) in 2022.
But the Manulife Asia Care Survey 2023 reveals that, on average, Singapore respondents expect to stay healthy till 61 years old. Only about one in 10 respondents consider themselves to be in good physical and mental health.
Published in March, the survey polled 1,037 Singapore residents and covered 7,224 respondents in seven markets across Asia. It was conducted between late December 2022 and early January 2023.
The study also found that Singapore residents are actively managing their own health: 65 per cent say they are exercising more, and 60 per cent are opting for a healthier diet.
“Health is a big concern among people who are closer to their retirement age,” says Ms Sarah Lee, 54, senior director of sales, Manulife Financial Advisers Singapore. “Many start to realise that it’s not just about accumulating wealth, but also ensuring that they are healthy enough to enjoy their retirement to the fullest.”
Ms Lee has 27 years of experience in financial services. Up to 85 per cent of her clients are aged between 40 and 60.
Protecting your wealth
The same survey found that healthcare costs are also a concern in Singapore, with 53 per cent of respondents saying that rising healthcare costs pose a risk to their financial goals.
Ms Lee emphasises the need for adequate insurance coverage in your retirement plan.
“In case of unexpected health events, such as critical illnesses or surgery, (adequate coverage) will ensure that medical expenses do not drain the hard earned savings you have accumulated,” she says.
Mr Zack, who asked that we not use his real name, shares that he has been updating his retirement plan over the years as his priorities change.
The 40-year-old, who works in a business development role in a technology company, says that his younger self had felt “invincible” and did not understand the importance of health insurance.
An event that happened five years ago changed his perspective. “A close friend passed away suddenly due to a heart attack at the young age of 28, and it struck me how fragile life can be.”
Mr Zack, then aged 35, promptly arranged for a consultation to get himself covered for hospitalisation and critical illnesses. “Ensuring I have enough insurance coverage is now a key aspect of my financial planning,” he says.
Create multiple streams of income
The average life expectancies of male and female Singapore residents at birth were 73.9 and 78.1 years in 1993. The figures have increased to 80.7 years and 85.2 years respectively in 2022, according to SingStat figures.
Manulife’s Ms Lee says this is a concern for many of her clients, who want to retire between 55 and 60 years old. “They worry that their savings may not last the entirety of their retirement years.”
The solution? To create “passive streams of monthly income” to continuously fund their retirement. These can include payouts from retirement annuity plans, or dividend returns from an investment portfolio.
A retirement annuity plan is an insurance policy that provides regular payouts, usually monthly, for as long as you live, or for a fixed period of time. It is typically funded through regular premiums at earlier ages.
Ms Lee explains that there are two main types of expenses in retirement: Fixed and variable expenses.
Fixed expenses such as basic living needs, financial support for surviving parents, and insurance premiums need to be funded by guaranteed income streams. These could be paid with your Central Provident Fund (CPF) monthly payouts, or retirement annuity plans.
Meanwhile, variable expenses for leisure activities such as holidays and hobbies can be supported by passive income streams. For example, dividends from investment portfolios which fluctuate according to market conditions, Ms Lee adds.
Staying invested in retirement
For older people with children, legacy and estate planning are on the top of their minds too, observes Ms Lee. For them, there is often a dilemma: Should I spend and enjoy retirement to the fullest, or live frugally so that I can leave more behind for my children?
“It’s a balancing act for many Asian parents, as they place importance on leaving something tangible behind for their next generation,” Ms Lee explains.
Mr Lim Chee Meng, 62, intends to pass on his five-room Housing Board flat to his children. He plans to use his savings to fund his own retirement.
He is an engineer in the manufacturing industry and will be retiring in two years.
Mr Lim, who is divorced, has two children aged 22 and 26. He does not intend to rely on his children for living expenses in retirement as he “has enough savings”.
With the advice of his financial consultant, Mr Lim intends to continue investing. Two reasons why he’s doing so: To stay ahead of inflation throughout his retirement years, and to increase the amount of assets that he can pass to his kids in future.
Ms Lee says it’s especially important now that many people are living longer in retirement. “That’s the only way to ease the pressures of inflation.”
Ms Lee adds that one should view retirement planning as an ongoing process that extends well into the retirement years.
“Work with a financial consultant that you trust, and actively assess your retirement portfolio every six months or so to get a clear picture of where you are at.”
This is the sixth of a nine-part series titled “Your wealth and well-being”, in partnership with Manulife Singapore.
