Most Singaporeans behind on retirement plans, many unsure how to grow wealth: Study

SINGAPORE — Most Singaporeans know how to save regularly and stick to a budget. But when it comes to saving enough for a rainy day or retirement, many still lag behind.

A new financial wellness index launched by OCBC Bank on Monday (July 15) found that Singaporeans are generally unsure how to grow their wealth through investing and building up enough funds. Close to one-third think of investing as a form of gambling.

The online survey conducted in May asked some 2,000 working adults, aged 21 to 65, a series of questions intended to present a picture of their overall financial health. The average monthly salary of the sample was S$6,300, with a median of S$3,500.

While Singaporeans fared well on basics like saving from monthly salary, arranging medical insurance coverage as well as sticking to a set budget, the study found that close to half were unable to stretch their savings to last for six months, with more than half not on track to accumulate enough funds for an emergency.

FOUR IN 10 WORRIED ABOUT MONEY

And planning for retirement? Nearly two-thirds — 65 per cent — were found to be behind in terms of accumulating enough money to maintain their lifestyle after retirement. Of these, many intended to rely on regular savings as the mainstay of their retirement plans.

A hefty 40 per cent of the respondents reported that they had worried about money the week they were surveyed.

The study was based on 10 markers of financial wellness determined by the bank’s financial experts, and was launched in an effort to study the state of financial health of Singaporeans.

These markers include saving habits, protection from financial emergencies, regular investments, retirement planning, regular reviews, gambling habits, excessive speculation, borrowing money from loved ones, spending money beyond one's means and manageable debts.

The questions were based on indicators such as a regular rate of savings, spending beyond one’s means to keep up with peers and gambling more than one can afford to lose.

The study established an index ranging from 0 to 100 points. The range from 0 to 24 indicates a respondent “has not started” financial planning. At the other end of the spectrum, 75 to 100 points indicated “started and ahead”. The overall average was 63 — which indicates “started but behind”.

The results showed that the reasons Singaporeans report financial gaps vary across age groups.

Those in their 20s save conscientiously and stick to their budget more than those in other age groups but close to half merely follow tips from friends and family. This approach, coupled with a lack of research, were found to be the main factors affecting investment performance.

Those in their 30s are commonly stretched between wealth accumulation and debt creeping in, with the anxiety of wealth accumulation combined with obligations, leading to less than ideal outcomes.

Those between 40 and 54, however, were found to grow in their wealth and financial protection, especially when they are married, but half who financially support both parents and children have difficulties meeting all these obligations.

Women were among the groups reporting worrying shortfalls. They tended to be more averse to investing, with close to half of women not knowing the best way to grow wealth.

About half of the working adults had no passive income and close to a third of them rely on excessive speculation for quick gains, the study found.

In a bid to improve the financial literacy of Singaporeans, OCBC Bank has launched a structured financial literacy masterclass using insights into behavioural traits of Singaporeans from the Financial Wellness Index, that is set to be conducted yearly.

In response to queries at a media event, Ms Nicole Foo, OCBC Bank’s vice president of market research and group customer experience, said that the bank will also look at including other segments of society that might have been left out in the study. She said the bank had plans to include lower income groups in the study in the coming months.

The masterclass features a web series consisting of four video modules taught by some of the bank's financial experts. The topics include: Manage your wealth, manage your debt, safeguard your wealth and grow your wealth. They are free to access online.

Ms Tan Siew Lee, OCBC Bank Singapore’s head of wealth management, said that locals generally look to bank websites, financial advisers and “coffee shop talk” in gleaning knowledge about managing their money.

“So that’s how, the usual route of reading, talking to friends, coffee shop talks or really just approach your financial adviser… coffee shop talk is just coffee shop talk. Of course, you can approach our (relationship managers) and things like that. But you need to have some basics before you sit down in front of a financial adviser and know what these guys are telling you and make a decision. Because ultimately, it’s your money right?”