Millennials in Singapore were more prepared for retirement than their middle-aged counterparts, a new report has found.
More than 60 per cent of the millennials surveyed by digital wealth management platform Syfe said they saved more than 20 per cent of their salary.
"At this stage of their lives, millennial respondents aged 25 to 34 seem on track for a comfortable retirement - provided they maintain their current savings rate and relatively low debt levels until retirement," said the report on retirement readiness of Singaporeans released yesterday.
But the picture was not as rosy for the majority of the 1,000 respondents aged 25 to 60.
Six in 10 scored at the lower range of the retirement readiness index, indicating that they would need to take additional steps to boost their retirement savings beyond current levels.
Almost 40 per cent were "significantly behind" on their retirement preparations and only nearly one-third were considered very well-prepared.
"This trend may be a reflection of the widening income gap in Singapore. Left unchanged, it also suggests that retirement inequality will only worsen as people become older with varying levels of savings," the report cautioned.
Among the older respondents, only about half were able to save at least 20 per cent of their salary for retirement.
This could be due to the greater financial responsibilities of these respondents in the "sandwich" generation as 74 per cent were currently paying off a mortgage, said the report.
The survey found that respondents who owned their homes were less prepared for retirement than those who rented. Nearly 30 per cent of the home owners surveyed saved less than 10 per cent of their salary and were deemed very ill-prepared for retirement.
The report pointed out that while a home may represent a financial asset in the long term, it is essentially a financial liability until the mortgage is paid off.
An individual with most of his retirement savings "tied up in property assets could be facing a less than ideal retirement since this property wealth does not contribute to retirement income", it said.
It also noted that the myriad costs involved with home ownership could be preventing the respondents from saving more.
Monthly mortgage payments could mean less money available for investments, which historically wins in terms of wealth creation, it added.
The respondents across all income brackets - ranging from $3,000 a month to more than $10,000 a month - were equally worried about funding their retirement. All of them did not expect to be able to maintain their current lifestyles in retirement.
The report recommended that Singaporeans step up on saving for retirement and look to investing their savings, instead of letting them sit idle in savings accounts, to grow their retirement nest egg faster.
Syfe founder and chief executive Dhruv Arora said: "Misconceptions about expectations in retirement and a lack of real financial literacy have left many in a difficult position where they may not be able to reach their own goals - often without them even knowing."
He said the survey was "a wake-up call for everyone to start taking their retirement plans seriously".