Singaporean Gen Zs and Millennials are worried about not having enough retirement funds

Even so, many are taking up "revenge travel and spending", and adopting "undesirable habits" such as spending beyond their means.

Despite being relatively far from retirement, a number of Gen Zs and Millennials surveyed in Singapore are concerned about achieving their retirement goals. In fact, 62% of those in their 20s, along with 56% of those in their 30s, worry about not having enough funds for it, OCBC's fourth Financial Wellness Index has shown.

As a result, many are turning to side income as a way to bolster their funds. For instance, close to one in six (14%) are invested in high-risk, high-return products, while close to one in five (18%) are invested in cryptocurrencies. Of these young crypto investors, two in five said that they would still be willing to invest in crypto this year, despite the volatility of the asset class in 2022.

Those in their 30s, the survey added, had a similar risk appetite, with 12% invested in high-risk, high-return products. At the same time, 14% are invested in cryptocurrencies, higher than the 8% of Gen Xs aged between 40 and 54, and 4% of Baby Boomers aged 55 and above who do so.

Apart from investments, Singaporeans are also taking up side hustles such as food delivery, running online businesses, giving tuition, or being influencers. Almost half (48%) of the respondents in their 20s, and two in five (40%) of those in their 30s, have done so, the Index noted.

The effects of revenge travel and spending

Another aspect noted in the survey is that Singaporeans do continue to be strong savers, with more people saving at least 10% of their salary (91% in 2022, vs 88% in 2021) and an increase in the average amounts they save (30% in 2022. vs 27% in 2021). 

However, with the post-pandemic recovery encouraging “revenge travel and spending”, and despite savings rates going up, more Singaporeans are allocating their savings to pleasures such as travel rather than investments, retirement, or emergency funds. Savings for emergencies fell seven percentage points to 61%.

And that's not all: while the survey found that a "consistent number" of Singaporeans continue to practice financial virtues such as sticking to a budget, reviewing their financial plans, and seeking professional advice, more are adopting undesirable habits across all indicators. These include gambling more than they can afford to lose (48% compared to 43% in 2021), paying only the minimum on their credit cards (34% compared to 27% in 2021), and spending beyond their means to keep up with peers (22% compared to 15% in 2021).

This has resulted in Singaporeans not being ready to face a financial crisis, it was revealed. In particular, less than half of the respondents (45%) can meet their families’ needs for the next one year, and a little over half (53%) have accumulated six months of salary enough to overcome a crisis.

Singaporeans want to retire better

All of the above are not stopping Singaporeans from wanting a better retirement lifestyle, as further showcased in the Index. To emphasise this point – while about 40% of respondents in 2021 picked the most basic lifestyle for their desired retirement, a lower percentage (34%) picked so in 2022. On the other hand, a higher number are looking for a more lavish retirement lifestyle, making up the majority (41%, up from 35% in 2021). 

While this is so, Singaporeans are still underestimating the amount needed for their desired lifestyle: On average, Singaporeans indicated they would need S$2,372 for Lifestyle B, but the actual cost of that lifestyle in today’s value is 35% higher than their estimations (S$3,210).

Methodology

The OCBC Financial Wellness Index, launched in 2019, is a measurement of the state of Singaporeans’ financial wellness. Every year, around 2,000 working adults in Singapore between the ages of 21 and 65 are surveyed online.

The Index is based on 10 pillars of financial wellness as defined by the Bank’s wealth management experts: saving habits, protection from financial emergencies, regular investing, retirement planning, regular reviews, gambling habits, excessive speculation, borrowing money, spending beyond means and manageable debt. To assess how respondents fare on these 10 pillars, 24 indicators – standards and guidelines that are widely-accepted best practices in financial planning – are used.

Based on their responses against these indicators, a score is calculated for each respondent ranging from 0-100. The individual scores from all respondents are then averaged to come up with the overall Index score.

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