More Singaporeans worry about retirement amid rising inflation. 1 in 2 open to investing their savings to tackle rising prices of goods and services
Endowus, Asia’s leading digital wealth platform, has launched the second edition of its annual Retirement Report. This year’s findings show more Singaporeans are concerned about retirement adequacy in 2022 (42%) than last year (37%). In particular, Singaporeans in the mid-high household income bracket expressed the greatest concern. Respondents from this demographic who were not confident about retirement adequacy jumped from 24% in 2021 to 42% this year.
This comes as overall inflation hit a 13-year high of 7% in July 2022, and 45% of respondents from the Endowus Wealth Insights 2022 report had said that inflation was their top finance-related worry for the year.
Middle and middle-high-income households with more dependents typically spend more on food, housing and utilities, and have thus been increasingly squeezed by inflationary pressures. Rising expenditure beyond the essentials has also intensified the felt impact. Private transport and holiday expenses, which are luxury spending more often consumed by mid-high income Singaporeans, have risen significantly at 24.1% and 8.1% respectively.
1 in 2 Singaporeans are open to investing their savings to tackle inflation
“While cutting spending and saving fastidiously can be helpful, it is unlikely to be a winning strategy to fight inflation. The best and only solution to inflation is to take a long-term view on retirement planning and investing in financial markets in the right way to make your money work harder for you. In such volatile times, we work together with our clients to reassess their financial and investment goals and to remain disciplined in sticking to their long term investment plans. While short term market volatility can spook people and weigh on our emotions, it is even more critical to rely on the evidence-based, tried and tested methods of long-term investing to improve the probability of success in achieving our goals,” says Samuel Rhee, Chairman and Chief Investment Officer of Endowus.
How different generations of Singaporeans are tackling inflation and retirement planning
In response to inflationary pressures, a majority of respondents prefer to cut down on non-essential expenses to curb spending (89%), or find ways to increase income streams (81%).
Millennials are also the least willing (83% compared to average of 89%) of all age groups to cut down on non-essential spending, with this being the preferred strategy for Gen X and Baby Boomers (93% and 94% respectively).
However, the younger generation in the early stages of their career are more likely than their older counterparts to hustle for new income streams, including side income and investing (87% for Gen Zs and Millennials, vs 81% for all respondents). This trend is observed despite recent news on “quiet quitting” and growing disillusionment with work, and the painful blowups in stock and crypto investing.
These findings are consistent with how respondents are planning for retirement. While Milllennials are most likely to take charge of their own financial plans (67%), which includes side income and investing, nearly half (47%) of all respondents still rely on CPF payouts for retirement despite the relatively low amounts of payout compared to income. This is especially true for Gen X and Baby Boomers (53% and 49% respectively).
More help needed to encourage Singaporeans to embrace investing for retirement readiness
Despite increasing interest in digital wealth platforms, robo-advisors and online brokerages, especially amongst Millennials, most Singaporean households are still slow to invest a meaningful amount of their assets on riskier investments.
The change in Singapore's household balance sheet reflects this ostensible risk aversion. Even with an overall household asset growth of 6.6%, growth in shares and securities lagged at 4% compared to CPF (9.6%) and life insurance (7.9%).
This muted investment interest and general risk aversion can be attributed to a lack of understanding on how best to navigate an inflationary environment. 75% of respondents understand how inflation affects financial markets, but only 47% of respondents are clear on which asset class and 45% understand what investments work well during high inflation. This is consistent with MoneySense’s 2021 National Financial Capability Survey results, where 4 in 10 respondents did not understand concepts such as risk diversification and simple or compounding interest.
These findings demonstrate a clear imperative for greater financial literacy resources and the need for more sound, trustworthy advice to help Singaporeans adopt a goal-based investing approach and determine the right level of risk at different stages of life.
Rhee added, “We are empathetic that a gap in knowledge is precisely what leads investors to take a more wait-and-see approach, with relatively low risk tolerance. This is why Endowus also launched our Fin.Lit curriculum this year to provide free and easy access to financial literacy and educational materials for everyone. We hope these resources, including this report, can help everyone gain fresh insights and a different perspective on how best to manage their wealth during difficult inflationary times.”
The Endowus Retirement Report 2022 was commissioned in partnership with YouGov Singapore, with fieldwork for the online survey taking place in August this year involving a total sample size of 1,087 adults, weighted to be nationally representative of Singapore’s adult population. The study aims to better understand Singaporeans’ preparedness for retirement amid rising inflation, and seeks to determine confidence levels of Singaporeans across demographics in making sound short-term budgeting and long-term retirement plans.
For more information about the Endowus Singapore Retirement Report 2022, please visit https://endowus.com/retirement-report-2022.
Endowus is Asia’s leading fee-only wealth platform. Licensed by the Monetary Authority of Singapore and Securities & Futures Commission of Hong Kong, Endowus is the first digital advisor in the region to span both private wealth (Cash) and public pension savings (CPF & SRS in Singapore), helping investors grow their money with expert advice and access to institutional financial solutions at low and fair fees, through a personalised digital wealth experience.
Founded in 2017, Endowus has raised a total of S$67 million in funding from investors such as UBS, EDBI, Prosus Ventures, Z Venture Capital, Samsung Ventures, Singtel Innov8, and global leading venture capital firms Lightspeed Venture Partners and SoftBank Ventures Asia. As of August 2022, Endowus has more than S$2 billion in assets under advice.
Endowus’ leadership and growth have been recognised by the industry and it has attained numerous awards including, Singapore’s Fintech Innovation in Asset Management, CEO of the Year, CIO of the Year (Asia Asset Management’s Best of the Best Awards 2022), Singapore’s Fintech Startup of the Year (The Asset Triple A Digital Awards 2022), and Startup of the Year and WealthTech of the Year (Asia FinTech Awards 2022). Endowus is also one of the firms named in Forbes’ “100 to Watch” list for 2022 and LinkedIn Top Start-ups 2022.
The Endowus Group comprises Endowus' licensed companies in Singapore and Hong Kong, as well as Hong Kong-based Carret Private. Endowus Group serves tens of thousands of clients with assets over US$4 billion, as of end-H1 2022, and is one of the largest independent wealth managers in Asia.