According Standard Chartered’s The Emerging Affluent Report - The Race to Save, a shocking low number of Singaporeans are confident enough to save for retirement. In fact, only 7% was confident.
As I looked at the detailed report, what I found even more shocking is that only 34% of those who are in the age 45 – 55 placed retirement as their top saving priority.
May I suggest three reasons why the statistics are so bad.
Too much into low returns instruments
According to the report, 53% of Singaporeans use savings account to achieve their financial goals. 21% used regular deposit savings plan to do likewise.
With such low returns, it is very difficult to grow one’s wealth. $100,000 with a return of 5% per annum over 30 years will grow to $432,194. If the same amount is placed in a fixed deposit of 1%, the money would grow to $134,785.
Top priority in property, less money for others
26% of Singaporeans put their top priority in saving for a property. But this means a huge amount of money is being ‘wasted’ into an asset due to the huge cost of property purchase. Here is an excerpt of the report:
But buying a home is becoming harder as prices rise, particularly for consumers living in some of the most expensive cities in the world – Hong Kong, Mumbai, Beijing, Shanghai and Singapore have some of the world’s most unaffordable housing.
Too much faith in friends and family
From the same report, 38% of Singaporeans seek advice from friends and family members to plan their finances. On the other hand, only 33% seek advice from financial planner /adviser.
It is like saying whom will you seek advice if you are sick. For minor ailments, I don’t mind trying out old-wives’ tales remedies from friends and relatives. But for a brain surgery, I am not going to put my life in the hands of friends and family.
Similarly, it is fine to listen to friends and family members for tips if you are punting a few thousand dollars in stocks. But you definitely need to consult a professional financial planner if you are going to throw your entire existing life savings (and future savings) into buying a large purchase like property or signing up a super duper expensive 101 ILPs.
Besides, planning for your future retirement will always involve more than a million dollar of potential investments which cannot be entrusted to friends and family members for advice.
From what I see, many Singaporeans treat retirement like gambling and just hoping for the best. That is why the picture shows two dices.
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