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Singapore’s younger generations are falling behind in retirement savings, with Gen Z and millennial investors aged 25 to 44 investing the least among all pre-retirement age groups, according to DBS study.
Despite having a longer investment horizon, they allocate only 15% to 17% of their salaries to investments, with over half directed toward lower-yield fixed-income assets.
The sixth edition of DBS’ Financial Wellness series, which analysed data from two million retail customers, highlighted the financial strain younger generations face due to liabilities such as home, car, and credit card loans.
Those aged 35 to 44 are particularly stretched, with debts slightly outweighing their liquid assets. Balancing responsibilities like raising children, supporting ageing parents, and career progression often leads them to prioritise immediate financial needs over long-term retirement planning.
However, DBS emphasises that younger investors still have time to build their nest egg. By 2030, the bank recommends a retirement savings target of SGD550,000 ($406,477) for those with conservative needs and up to SGD1.3m for those with more aspirational goals.
Retirement Planning in Singapore: Key Findings
Retirees aged 65 and older have a stable financial position, with CPF payouts covering 55% of their expenses, but rising healthcare costs remain a significant concern.
According to the 2023 Household Expenditure Survey, healthcare accounts for 11% of expenses for retirees, compared to 6.7% for the general population.
Strategies for a Secure Retirement
DBS recommends several strategies for younger investors to strengthen their financial position:
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CPF LIFE payouts are crucial for retirement, but individuals can increase their savings by setting aside the Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS).
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Younger investors are encouraged to diversify their investments by investing more in equities through unit trusts, ETFs, or insurance plans for higher returns.
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Generating multiple income streams, such as rental income, annuities, and home equity monetisation through lease buy-back schemes or equity products.
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DBS sees a surge in retail investment activity, with nearly one million customers actively investing and insuring, and a doubled year-on-year increase in Regular Savings Plans.
Said Derek Tan, Head of Regional Property Research, DBS Group Research stated: “Across generations, the question of whether SGD 1 million is enough for retirement remains a hot topic. Our study has revealed that early financial planning for a well-structured nest egg can enable individuals to navigate immediate financial priorities while preparing for a fulfilling retirement. However, seniors will need to address the dual challenge of managing rising healthcare costs while ensuring their wealth continues to support a comfortable lifestyle in their golden years.”