Most Singaporeans fret about retirement savings: Study

A poll of 1,000 Singapore respondents found that Singaporeans expect to stop working at 60 and spend 17 years in retirement.
A poll of 1,000 Singapore respondents found that Singaporeans expect to stop working at 60 and spend 17 years in retirement. PHOTO: ST FILE

Almost two-thirds of Singaporeans fear they will not be able to stretch their retirement dollar, an investment poll has found.

People here are well aware of the need to squirrel away assets for old age - but also face a six-year savings gap, as life expectancy outpaces the time they plan to spend in retirement.

The poll of 1,000 Singapore respondents found that, in general, Singaporeans expect to stop working at 60 and spend 17 years in retirement. But this would only take them as far as the age of 77, against the average lifespan of 83 years.

Moreover, close to half of investors’ assets, or 47 per cent, is parked in cash – just shy of 2015’s 48 per cent. They held, on average, $35,000 in long-term savings or as an investment, according to wealth management firm BlackRock's study.

The cash allocation is roughly on a par with the rest of the region, with the survey sampling adults in mainland China, Hong Kong, Japan, Singapore and Taiwan in January and February.

Another 26 per cent of retirement portfolios is tied up in financial investments, such as equities and bonds, while 16 per cent is in insurance-linked investments and 7 per cent in property.

BlackRock's country head, Mr Kevin Hardy, said in a statement: "It is important to make cash work harder by taking on some risk to generate desired retirement income. We find income-related products such as dividend-growing equities or high-quality debt to be popular among Singaporean investors. This can be a great means of delivering higher income than cash within diversified portfolios, without sacrificing asset growth."

EXPECTATIONS

Most Singaporeans are realistic about the performance of their investments, aiming for a target return of around 5 per cent. But they're highly unlikely to get there by holding cash. In fact, it would still take Singaporean investors 35 years to double (their) money in cash, assuming a long-term expected rate of return of 2 per cent.''

BLACKROCK

Singaporeans still fared better than investors elsewhere. In the United States and Canada, about 57 per cent of portfolios is in cash, while the figure hits an eye-watering 68 per cent in Europe.

Among respondents here, 68 per cent told pollsters they have started saving for their old age, lower than the region's 74 per cent average. Meanwhile, 64 per cent of Singaporeans polled worried their savings would expire before they did.

BlackRock noted in a summary of its findings that "most Singaporeans are realistic about the performance of their investments, aiming for a target return of around 5 per cent". "But they're highly unlikely to get there by holding cash," it added. "In fact, it would still take Singaporean investors 35 years to double (their) money in cash, assuming a long-term expected rate of return of 2 per cent."

Correction note: BlackRock has clarified that close to half of investors’ assets, or 47 per cent, is parked in cash – just shy of 2015’s 48 per cent. It did not carry out such a survey in 2016. We are sorry for the error. 

A version of this article appeared in the print edition of The Straits Times on August 22, 2017, with the headline 'Most S'poreans fret about retirement savings: Study'. Print Edition | Subscribe