One in five Singapore residents who have resigned or intend to leave their jobs since the start of the pandemic say they expect the move to delay their retirement by six years, according to a recent survey.
The break will push back their retirement from an average age of 58 to 64, the poll has found.
This is among the key findings of a poll1 commissioned by Prudential Singapore in April 2022 to explore the impact of the Great Resignation in the city-state. It covered 1,000 Singapore residents between the ages of 25 and 50 and was conducted by Milieu Insight.
Their responses shed interesting insights into what is known as The Great Resignation where employees quit their jobs in droves as they reassess their life priorities and career goals during the pandemic.
In the Prudential survey, the key reasons cited by the respondents for wanting to leave their jobs include no longer feeling engaged, seeking better career prospects, taking a break for mental wellness, and wanting to leave a toxic work environment.
The poll also examines the extent to which the phenomenon has impacted perceptions of financial security in old age – a six-year delay in retirement.
Residents who have resigned or intend to leave their jobs say they are taking responsible actions to manage the financial impact of their career breaks.
Thirty-three-year-old Grace Tang, for instance, quit her job in the entertainment tech industry because she felt she was becoming stagnant and wanted to try something different. Like many others, she has done some retirement planning and is working towards building enough retirement funds so she can sustain the lifestyle she wants when she retires.
Among respondents of the survey, one in two say they will cut their spending by 31 per cent every month, with more than six in 10 indicating they will dine out, shop and watch movies less frequently. Slightly more than half say they will take fewer trips on taxis or private hire vehicles.
Importance of investments and insurance
“Many people leave their jobs to recharge and rejuvenate. However, without proper financial planning, a career break can result in greater stress and adversely impact one’s retirement plans,” says Mr Dennis Tan, Prudential Singapore’s chief executive officer.
The survey also revealed that nearly one in two respondents are unprepared for retirement, a worrisome finding in a rapidly ageing society. Those aged 25 to 34 made up almost half this group. By 2050, those above the age of 65 may account for 47 per cent of Singapore’s population, up from around 16 per cent in 2020.
“With rising lifespans, Singaporeans need to accumulate even bigger nest-eggs so as not to outlive their savings,” he adds.
Singapore’s life expectancy was 83.5 years in 2021, up from 78.3 years in 20012. Some experts have warned that people should be prepared to live till 100 due to advances in medical science and improvements in the public health service3.
According to the Prudential survey, more than 80 per cent are concerned about the increasing cost of living and healthcare expenses. The proportion will likely grow, in line with rising life expectancy, without an increased emphasis on financial planning.
“I have a retirement plan in place, but I want to sit down with my financial adviser again once I’ve had my second child,” says 34-year-old Lily Yap, who will become a mother again in November.
“As my family grows, our expenses grow too. I’m worried about inflation haemorrhaging the value of our savings, she adds.
Among those who expressed confidence that they have enough to retire, slightly over two-thirds have invested in shares, bonds and exchange traded funds (ETFs), while another 46 per cent had insurance to protect them and their loved ones against death and illness.
In contrast, only half of the people who are unprepared for retirement had investments, while 36 per cent had taken up insurance.
When it comes to funding for retirement, many Singaporeans depend primarily on their Central Provident Fund (CPF) and bank savings.
For instance, more than seven in 10 respondents listed CPF savings as their top source of retirement income.
“Putting your money in different financial instruments, instead of only relying on savings, is important for retirement planning. Diversifying your portfolio also helps spread risk and smooth out volatilities during challenging market conditions, says Mr Tan.
Retirement plans: What do they involve?
Retirement planning involves saving for the future, and receiving a regular stream of income once a person is no longer working.
Choosing the correct retirement insurance plan depends on the individual’s retirement needs. For instance, those who want to retire earlier will need endowment plans that start at a younger age and which can stretch over a longer period.
Regular payout plans can be customised to include payments over a pre-determined time period such as 10, 15 or 20 years.
Some plans may offer coverage for death and terminal illness, which a person may not need if he already has such benefits.
There are those who might prefer endowment plans that provide a lump sum payment, so that they can pay for the children’s overseas education or a round-the-world holiday to mark the start of their retirement.
If higher yields are a key consideration, an Investment-Linked Policy (ILP) with a protection overlay might be a good fit.
“Regardless of how you plan, it is important to start planning early so you have a longer runway to grow your retirement funds,” Mr Tan says.
At Prudential, there is a wide range of annuity and retirement plans, many of them adjustable, to cater to different needs.
2 Department of Statistics https://tablebuilder.singstat.gov.sg/table/TS/M810501
Disclaimer:
This article is for your information only and does not consider your specific investment objectives, financial situation or needs. We recommend that you seek advice from a Prudential Financial Consultant before making a commitment to purchase a policy. Information is correct as at Oct 12, 2022.
