S'poreans facing $250k retirement shortfall: Survey

PHOTO: S'poreans facing $250k retirement shortfall: Survey

SINGAPORE - Singaporeans might have to work during their retirement years due to insufficient savings, according to a Manulife investor sentiment index released today.

The survey found that investors are putting aside only 18 per cent of their current monthly income for their retirement needs.

Those surveyed think they will save an average of about $506,000 when they retire and expect this amount to fund their retirement needs for an average of 18 years.

This is based on an average monthly income of S$5,600 - and most investors expect that 64 per cent of this amount is needed every month for their retirement. This works out to annual retirement expenses of around S$43,000.

However, based on their estimated retirement expenses, the retirement savings would last for only around 12 years, leaving an expense shortfall of 6 years, or approximately $250,000 per person.

The survey also found that 32 per cent have not started planning for retirement, due to reasons such as low disposable income or having to support children and elderly parents.

Ms. Annette King, President and CEO of Manulife Singapore said: "With life expectancy increasing, people should plan to have retirement savings to last at least 20 years.

"The shortfall threatens the security and lifestyle of Singapore's workforce when they retire.

"Only 11 per cent of those surveyed said they are certain of being able to afford a comfortable retirement, although 41 per cent believe they are ahead of schedule or on track to achieve their financial goals.

"Each of us should ask, am I willing to downgrade my lifestyle when I retire? For many Singaporeans, these past few years have been good.

"Singaporeans are living comfortably and have come to treasure their travel plans. Many don't want to backtrack when they retire.

"That's why it's important to put your money to hard work because inflation can erode the value of your savings. There is more to planning for retirement than the cash you save from your monthly income."

Savings shortfall drives some to semi-retirement, but are jobs available?

69 per cent of Singaporeans expect to have to work part- or full-time during retirement. This is higher than anywhere else in the region, which averages 55 per cent.

Yet opportunities for aging workers in Singapore may be more limited. In 2012, Singapore's Ministry of Manpower reported those 65 and older comprised only 4.1 per cent of the workforce.

"While working past the age of 65 is becoming more commonplace, many aging workers will find this more difficult than they anticipated.

"They often fail to consider the limited employment opportunities for their age group. And for a significant portion, health concerns ultimately prevent them from working," added Ms. Annette King.

It is common for retirees to rely on their children for financial support - something that the Singaporean government actively supports - but the practice stirs some anxiety.

While 20 per cent of investors in Singapore expect to rely on their children for financial assistance after retirement, only 11 per cent feel comfortable doing so. Conversely, 55 per cent expect to support their parents in retirement.

Jill Smith, Senior Managing Director for Manulife Asset Management Singapore, added: "The accumulation of wealth leading up to retirement is generally emphasised.

"Yet, investors also need to think about investing in a way that will continue to provide returns and generate income after they have retired."