Covid-19 raises retirement uncertainty: poll

Given the financial impact of Covid-19, more Singaporeans are concerned that they will retire less comfortably, a survey by digital wealth manager Syfe has shown.

This comes even as the effects of a global pandemic has prompted Singaporeans to save more.

With this, 71 per cent of respondents do not think they can retire comfortably, up from 69 per cent who expressed the same sentiment in 2019. Most respondents across all income groups also do not expect to maintain their current lifestyles in retirement.

Syfe's study, conducted among 1,000 Singaporeans aged 25 to 60, assigns each respondent a Retirement Readiness Index score, which accounts for each individual's estimated retirement income over their estimated retirement needs.

These scores span four levels of retirement readiness, including very low (130).

62 per cent of respondents fell into two camps on the extremes of Syfe's retirement readiness spectrum. Nearly a quarter, or 24 per cent, considered themselves very well-prepared for retirement, with scores above 130, while some 38 per cent are significantly behind in planning for their twilight years, with scores below 70.

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"This trend may be a reflection of the widening income gap in Singapore. Left unchanged, it also suggests that retirement inequality will worsen as people become older with varying levels of savings," Syfe said in a report on the survey's findings.

Here are other key findings from the study:

Millennials are top savers

Many financial experts recommend saving at least a fifth of one's monthly wages. 46 per cent of the respondents aged 35 to 44 say they are achieving that, and about half, or 51 per cent, or those aged 55 to 60 say they do so.

In contrast, some 66 per cent of those below the age of 35 - which would include millennials - now save more than 20 per cent of their salary. 

To be sure, Syfe's team noted that the "sandwiched" generation, referring to those aged 35 to 54, may be less able to save due to other financial responsibilities. For instance, 35 per cent of those within this age range are paying off a mortgage loan.

Millennials are typically defined as one born between 1981 and 1996 - or that are aged between 25 to 40 in 2021. 

Home ownership could lower retirement readiness

The study found that a quarter of homeowners (24 per cent) saved less than 10 per cent of their salary. This group had a median score of 40, signifying a "very low" level of retirement readiness.

The study also found that those who rent their homes generally had higher retirement readiness scores compared to homeowners.

Individuals with most of their retirement savings tied up in property assets could be facing a less than ideal retirement if their property wealth does not contribute to retirement income, Syfe said in its report.

Covid-19 has changed how people manage their finances

72 per cent of those surveyed agreed that the pandemic prompted them to "take immediate action" in planning for retirement, while 73 per cent also said they either increased or maintained their level of savings as a result of it. That said, half of those surveyed still save less than a fifth of their salaries.

The study found strong connection between an individual's savings rate and their retirement outlook. For instance, those who are adequately prepared for retirement (with index scores beyond 100) are also those who save at least 30 per cent of their incomes.

Among all respondents, 40 per cent have assets kept in their savings accounts. One in 10 keep all their cash savings in savings accounts.