As Ms A headed towards retirement earlier this year - in the midst of the Covid-19 pandemic - after 30 years in the financial industry, she was a little unsettled, wondering if she had amassed sufficient assets to provide an income for at least another 30 years of comfortable living.

Her healthy mother is about to hit 97 years, and her grandmother lived to 90. The longevity genes are strong, recounted Ms A.

A sound piece of advice she'd received was not to just take stock of her assets and liabilities, but critically, to also tally up her income and expenses with a financial adviser.

Most of us are pretty aware of our holdings, and their values. Singaporeans - by and large, property obsessed - are usually up to date on the value of their homes, plus investment properties, if any. Most also know the amount of their stock holdings if they own equities.

Income is easier to get a handle on: rental income, if any, minus all expenses, is available from the annual tax returns; while poring through Central Depository (CDP) statements gave details of dividends from equities, she found.

What's less easy to grasp is your income and expenses. Intuitively you think you know, more or less, what that is, but sitting down with an adviser who would prompt you on the details - for instance, the amount spent on weekly date nights with your spouse, facials or yoga sessions - may bring more clarity to your spending behaviour.

Totting it all up with the help of an adviser is a useful exercise, and Ms A was assured that her financial planning over the past four decades was on track.

"Most people tend to check in with their finances only when they need to make important money decisions, that is, on an 'episodic' basis," said Ms Evy Wee, DBS Bank head of financial planning & personal investing.

But financial planning really starts with our daily money decisions, and every action we take contributes to attaining our financial goals, she said, highlighting that with longevity and inflation risks, it is vital to go beyond focusing on immediate financial needs.

"For those who have retired, we help them optimise their nest egg via decumulation - through reviewing assets like home property, insurance and investment portfolios, and converting them into cash flows for a sustainable retirement," said Ms Wee.

The pandemic of the past 17 months has brought home some of the investment missteps one could make: for instance many listed companies trimmed their dividend payouts. Retirement in the year of the pandemic can be unnerving if anticipated income from dividends fall short.

One sound tip about financial/retirement planning is to maintain a minimum of three to six months of emergency funds.

Fortunately, a report by DBS found that many people are savers. Retail investors who saw the plunge in stock prices as buying opportunities are generally higher income earners with substantial savings. Even at the lowest income bracket, 21 per cent of customers have more than six months of emergency funds.

When comparing data from the first two months of 2020 with figures from a year later, DBS observed a four-fold increase in the number of retail investors who are now invested in global equity markets. Similarly, CDP account openings with the Singapore Exchange grew by more than 2.5 times between February and July 2020 compared with the same period in 2019.

"Our data also indicated that almost half of our retail customers who are invested have holdings in retirement schemes," said Ms Wee.

"We expect the pool of customers who invest to increase, as more will come forward to capitalise on current market opportunities in order to counter inflation and longevity," she said.

Mitigating risks with digital tool

While it is encouraging that more investors are diversifying their portfolios, it also means more of them have a higher and wider exposure to market risks than ever before.

Investors must also fully comprehend the risks that each investment solution carries, especially as uncertainty (and consequently, market volatility) from the pandemic remains.

DBS customers without guidance typically invest $3,000 a year. However, customers who are guided by personalised recommendations in the DBS NAV Planner - a digital financial and retirement advisory tool - invest more than double of that, at around $7,500 a year.

As DBS NAV Planner users have a better understanding of their risk profile and appetite, they are also able to invest their excess cash savings more adequately than others. "While we were reasonably sure of this logic before, we now have data substantiating the fact that our customers need and are enabled by a guided advisory framework,'' said Ms Wee.

Bouncing back from the pandemic

According to the DBS NAV Financial health report, the financial health of Singapore residents has improved across the board despite the pandemic.

Data collated over the past year showed that the share of customers who experienced a significant decline in income fell to 19 per cent in December 2020, a seven-percentage point improvement as compared with 26 per cent in May 2020. This reflects an improvement in the financial wellness of Singapore residents amid the recovery from the crisis. Among those affected, the extent of impact has also moderated.

Macroeconomic data does not reflect the full impact of the Covid-19 crisis on people's income, savings and spending, said DBS. To get a clearer picture, the bank analysed anonymised and aggregated data insights from 1.2 million retail customers to examine the effects of the pandemic on individuals' financial wellness.

Emergency savings of all income groups rose amid the crisis and peaked in June 2020, before tapering off gradually as economic conditions improved. For example, the emergency funds of customers who earn more than $10,000 peaked at an amount equivalent to four months' worth of salary.

However, the savings situation of those who suffered income decline appears to have worsened. As of December 2020, almost half of customers (47 per cent) who experienced a significant fall in income had less than a month of emergency funds, up from 42 per cent in May 2020.

The lack of sufficient savings appears to be more pronounced in the lower-income group, as they are most likely to have dipped into their savings to weather the crisis.

Policy measures aimed at helping this vulnerable group will remain crucial this year.
As the pandemic situation improved, so did spending. From August to December 2020, spending rose steadily for all income groups.

Expenditure in December across all income groups was significantly higher than that in April last year. More specifically, discretionary spending picked up, compared with spending on essential items as economic prospects improved.

This growth in spending could be due to several factors, including a higher propensity to spend during the school holidays and Christmas period. The year-end spike in cash outflows could also be due to top-ups to Central Provident Fund (CPF) accounts and the Supplementary Retirement Scheme to qualify for personal income tax reliefs. Indeed, the CPF Board saw a 40 per cent year-on-year increase in CPF top-ups to $3 billion under the Retirement Sum Topping-Up Scheme in 2020.

In the last three months of 2020 alone, the Board saw a substantial increase in top-ups of $1.2 billion.

Financial and retirement planning may appear daunting to some people, due to the continuous efforts needed to consolidate, monitor, review and take concrete action on financial decisions relating to their finances. Then there is the effort required to find suitable opportunities to enhance one's financial wellness. But with the right advice and tools, achieving your goals may not be that difficult.

The writer, an ex-Business Times journalist, religiously adheres to maintaining the minimum three to six months of emergency funds.