Retirees face hardship after savings run out

Future retirees in Singapore face the grim prospect of their retirement savings running out halfway through their retirement, as they estimate their savings to cover only nine out of the 17 years they expect to live in retirement, according to HSBC's latest study, the Future of Retirement: A New Reality. This is also the case in Asia and globally where on overall average, retirement assets dry up just over half-way (56%) through retirement.

During the remaining eight years depleted of retirement savings, they are left to grapple with rising healthcare costs and other burdens associated with old age as they transition from active retirement into the years of frail retirement. It also does not help that over half (56%) of Singapore respondents acknowledge that they are not preparing adequately or not preparing at all for retirement.

How long people expect to live in retirement versus how long they expect their retirement savings to last (expressed in number of years)

retirees in singapore-graph-1

Source: The Future of Retirement: A New Reality

The report, the eighth in the Future of Retirement series of research and which surveyed more than 15,000 people across 15 countries1, aims to identify people's retirement needs and how they are preparing for it, providing authoritative insights into key issues associated with ageing populations and increasing life expectancy around the world. More than 1,000 respondents in Singapore participated in this study.

Two-thirds of current income to feel comfortable in retirement

In order to live comfortably during retirement, people in Singapore indicate that they will require 66% (or two-thirds) of their current annual household income which works out to be S$60,400 or S$5,033 per month. This is 68% more than in the last 2011 study where the figure was S$3,000. Singapore's income replacement ratio, together with Australia (also 66%), is the lowest across 15 countries surveyed where the global average is 78%.

Income replacement ratios: % of current annual household income required to feel comfortable in retirement

retirees in singapore-graph-2

Source: The Future of Retirement: A New Reality

Annual household income required to lead a comfortable retirement

Australia	AUD58,000 (approximately USD60,471)
China	RMB166,100 (approximately USD26,662)
Malaysia	MYR76,900 (approximately USD24,801)
Hong Kong	HKD436,000 (approximately USD56,217)
India	INR1,116,200 (approximately USD20,982)
Singapore	SGD60,400 (approximately USD48,773)
Taiwan	TWD1,068,600 (approximately USD36,120)

Source: The Future of Retirement: A New Reality
Conversion rates as of 4 February 2013: Bloomberg

Reliance on cash savings

Cash remains a big part of Singaporeans' wealth portfolio. On what makes up retirement income, the study found that the largest proportion will come from cash savings and deposits which constitutes a third (34%) of retirement income here, followed by investments (19%), and property income and assets (12%). This reliance on cash to fund one's retirement income is reinforced by another finding where over two-thirds (69%) of Singapore respondents expect cash savings and deposits to contribute towards their retirement income, followed by life insurance (54%), stocks and shares (37%), and income generated from property (36%).

Proportion of sources expected to make up the retirement income of Singapore respondents

retirees in singapore-graph-3

Source: The Future of Retirement: A New Reality

retirees in singapore-img

Retirement aspirations and fears

Spending more time with friends and family (71%) and taking more holidays (63%) are the top two most popular retirement aspirations cited by the large majority of respondents here. Interestingly, the desire to continue working is an important aspiration for 47% of Singapore respondents, indicating a significant lifestyle change where retiring later in order to earn a living for as long as one can is becoming more prevalent as people cope with longer life expectancy. This is considerably higher than the global average of 35%, which seems to support a general observation that more in Singapore are staying employed beyond the conventional retirement age out of necessity, rather than choice, to maintain a lifestyle of their preference.

With close to half anxious to keep up with previous standards of living, it is, therefore, not surprising that the top three fears accompanying these aspirations about retirement are poor health (70%), financial hardship (62%) and not having enough money to provide for good healthcare (60%).

Source: HSBC 12 July 2015

PROPERTY LAUNCHES & INVESTMENTS

Property Launches & Investments

Retirees face hardship after savings run out

How long people expect to live in retirement versus how long they expect their retirement savings to last (expressed in number of years)

Two-thirds of current income to feel comfortable in retirement

Income replacement ratios: % of current annual household income required to feel comfortable in retirement

Annual household income required to lead a comfortable retirement

Reliance on cash savings

Proportion of sources expected to make up the retirement income of Singapore respondents

Retirement aspirations and fears

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