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About the study
CIO Foreword
Study Findings
Inflation & Investing

Study Findings

Middle-income retirement challenge
Millennials say no to quiet quitting
Millennials are planning their finances proactively
Most Singaporeans are still not investing
Help is needed for intentional investing

Study Findings

Middle-income retirement challenge
Millennials say no to quiet quitting
Millennials are planning their finances proactively
Most Singaporeans are still not investing
Help is needed for intentional investing

More individuals from middle-income households see high inflation as a major challenge to achieving retirement adequacy

Chart 1 shows that more Singaporeans are concerned about retirement adequacy this year (42%) than those surveyed last year (37%). The middle-income households are signalling a greater loss of confidence than before — in particular, the demographic with the most significant increase in respondents with retirement uncertainty is from the mid-high household income bracket (42% this year compared to 24% in 2021).

% not confident about retirement adequacy, by household income
% of 2021 respondents
% of 2022 respondents
37%
42%
All respondents
50%
47%
Low
38%
43%
Mid
24%
42%
Mid-high
17%
19%
Very high

Source: Endowus Retirement Report 2022

Low - Household income at SGD 4,000 and below
Mid - Household income at SGD 4001 - 8,000
Mid-high - Household income at SGD 8,001 - 15,000
High - Household income at SGD 15,001  and above

Chart 1

While Singaporeans are all hit by record high inflation, support schemes from Budget 2022 were rolled out to especially help low to middle-income families. This leaves middle and middle-high-income households to contend with much of the upcoming GST hikes and cost of living pressures themselves. Private transport and holiday expensesi, which are luxury spending more often consumed by mid-high income Singaporeans, have risen significantly at 24.1% and 8.1%, respectively.

To better plan for retirement, middle-income Singaporeans should make better use of tax relief schemes.

Cash top-up and CPF transfers under the Retirement Sum Topping Up Scheme is one option, where Singaporeans can get maximum tax relief of $8,000 for their own CPF account. Another great, and less known, option is the Supplementary Retirement Scheme top-ups (maximum tax relief of $15,300), which can help save on income tax expenses. Single-income households with a monthly income of $15,000 can save up to $4,095 by leveraging CPF and SRS top-up tax savings.

More households have already jumped on the bandwagon to use CPF more effectively for their retirement needs. CPF top-ups in the first nine months of 2022 hit a record of more than $3.5 billion. Meanwhile, SRS contributions topped $2 billion in 2021 to reach over $14 billion in total, doubling in the five years prior.

No to quiet quitting: Young Singaporeans are hustlers and spenders

To understand retirement planning, we also have to take a look at lifestyle choices across the different demographics. Despite recent trends of quiet quitting and painful blowups in stock and crypto investing, younger survey respondents are more likely than their older counterparts to hustle for higher income (87% for Gen Zs and millennials, vs 81% for all correspondents). But they are also less likely to cut down on non-essential spends (85%, 83% for Gen Zs and millennials respectively, vs 89% for all correspondents).

The majority of young Singaporeans are at the early stages of their career, and the trend of young job-hoppers fighting for a more attractive pay package is consistent with this finding.

How different generations tackle inflation
% of respondents preferring to cut down non-essential expenses due to rising costs
% of respondents finding ways to increase income, including side income. investing
89%
81%
All respondents
85%
87%
Gen Z
83%
87%
Millennials
93%
81%
Gen X
94%
71%
Baby Boomer

Source: Endowus Retirement Report 2022

Gen Z: Born between 1997 to 2009
Millennials: Born between 1981 to 1996
Gen X: Born between 1965 to 1980
Baby Boomer: Born from 1918 onwards

Chart 2

However, young Singaporeans should be wary of lifestyle creep. Based on the survey, Singaporeans (70%) across all generations are less likely to prefer to downsize or delay bigger financial goals. Young professionals with aspirational big-ticket spending have to be wary of even higher inflation with luxury spending: private property and car prices increased by 9.3%i and 14.4%i in 2021.

With rising interest rates, cooling property measures, and a looming recession, there are risks that Singaporeans should take into account before committing to long-term, big financial spending.

Despite being torn between short-term and long-term needs, millennials want to plan more proactively

Given the harsh economic environment and lower expected growth, millennials are less likely to rely on CPF payouts for retirement and more likely to take charge of their finances. From Chart 3, out of different generations, millennials are most likely to have their own financial plans (67%) and less likely (40%) to rely on CPF payouts.

How different generations plan for retirement
% of respondents with other personal financial plans for retirement
% of respondents planning to rely on CPF payouts for retirement
64%
47%
All respondents
56%
44%
Gen Z
67%
40%
Millennials
65%
53%
Gen X
62%
49%
Baby Boomer

Source: Endowus Retirement Report 2022

Gen Z: Born between 1997 to 2009
Millennials: Born between 1981 to 1996
Gen X: Born between 1965 to 1980
Baby Boomer: Born from 1918 onwards

Chart 3

Millennials, as digital natives, prefer lower-cost, self-directed options provided by digital wealth platforms. A survey by Capgeminii showed that millennials changed wealth management platforms because of high fees (46%), lack of transparency (39%), and slow service (33%).

The democratisation of information can both empower and confuse millennials who want to take charge of their finances. Millennials can either self-educate through online articles and videos to craft their own investment plans, or rely on trusted digital wealth managers. These digital advisors can provide curated financial literacy courses and self-help tools to provide a more personalised investing experience rather than leaving millennials to make sense of conflicting information.

Using a hyper-personalised tool is especially important for CPF, with its complex schemes that may only be relevant to specific demographics. The Endowus CPF Calculator is a self-service tool that gives projections to not only one’s CPF balances but also tips on how best to grow one’s CPF.

More Singaporeans can embrace investing

Based on Chart 4, just 48% of Singaporeans are open to investing to tackle inflation. It is most well-received by millennials (58%), though there is room overall for more Singaporeans to embrace investing to ensure that they are ready for retirement in the years to come. 

Receptiveness to use investing to tackle inflation
% of respondents who are investing their savings to tackle inflation
48%
All respondents
46%
Gen Z
58%
Millennials
51%
Gen X
34%
Baby Boomer

Source: Endowus Retirement Report 2022

Gen Z: Born between 1997 to 2009
Millennials: Born between 1981 to 1996
Gen X: Born between 1965 to 1980
Baby Boomer: Born from 1918 onwards

Chart 4

The change in Singapore's household balance sheet reflects the risk aversion of Singaporeans: based on Chart 5, even with an overall household asset growth of 6.6%, growth in shares and securities lagged at 4.0%, compared to CPF (9.6%) and life insurance (7.9%).

Growth in household sector balance sheet
compounded annual growth rate of household balance sheet  from Q2’11 to Q2’22
6.6%
Total Household
Assets
9.6%
CPF
‍
7.9%
Life
Insurance
7.4%
Currency
& Deposits
5.6%
Property
Assets
4.0%
Shares
& Securities
2.7%
Pension
Funds

Source: SingStat, Oct 2022

Chart 5

Despite increasing interest in digital wealth platforms, robo-advisors and online brokerages, Singaporean households are still slow to invest a meaningful amount of their assets on riskier investments. Also, Singaporeans should be more proactive in utilising their CPF, given that it is the fastest growing asset (9.6%) in household balance sheets.

Out of that sizable CPF household balance ($530.3 billion as of end of Q2’2022), over $179.9 billion is in the lower yielding Ordinary Account (CPF OA). With CPF Investment Scheme (CPFIS) being a small proportion of the total CPF OA balance (9.4%, or $16.9 billion), more Singaporeans should work their long-term retirement wealth harder through investments.

Our Retirement Report in 2021 showed that 75% of Singaporeans are not investing their CPF currently, with 68% of correspondents preferring to focus on non-CPF options.

Another observation from Chart 4 is that few older Singaporeans (34%) are investing their savings against high inflation. Generally, older people have a lower risk tolerance due to a lack of employment income and a shorter investment horizon.

However, with longer life expectancy and greater access to financial products, older citizens can consider sizing their risk assets appropriately using a bucketing strategy.

For short-term living expenses, they can allocate a portion of their savings into the cash bucket, which can be placed in savings accounts, bank deposits and cash management solutions to ensure that they are not taking excessive risks.

For the middle-term expenses, between three to seven years, the money in this defensive bucket is invested in fairly defensive assets such as bond funds or bonds to generate some returns.

For longer-term expenses and even assets meant for a bequest, they can choose to take more risk since the investment horizon is longer.

As one ages, they will first spend from the cash bucket. Once the cash bucket is depleted, the defensive bucket will be sold down in order to replenish the cash bucket. This strategy allows older Singaporeans to adjust their investments based on changing needs and preferences, and provide peace of mind during volatile times.

More help is needed to make intentional investment choices in uncertain times

A lack of understanding on how best to navigate an inflationary environment also contributed to muted investment interest. Based on Chart 6, while 75% of respondents understand how inflation affects financial markets, less than half are clear on which asset class (47%) and what investments (45%) work well during high inflation. This is consistent with MoneySense National Financial Capability Survey 2021, where 4 in 10 respondents did not understand concepts such as risk diversification and simple/compounding interest.

After more than a decade of low inflation and interest rates, investors are understandably spooked by the spike in inflation and interest rates. With Singapore brokerages also reporting lower Q2’22 earnings, more investors seem to be taking a wait-and-see approach to investing.

Perceptions of investments and inflations

Source: SingStat, Oct 2022

Chart 6

For those who are investing, there is a preference for equities, Singapore Savings Bonds (SSBs), REITs, and property investments as tools to tackle inflation. Chart 7 also shows a clear gender bias regarding investment choices, with females preferring fixed deposits while males prefer equities and REITs. Taking a goal-based investing approach can help Singaporeans take the right level of risks for different financial goals.

Preferred investment instruments towards tackling inflation
34%
34%
35%
Singapore Savings Bonds
27%
21%
33%
Fixed Deposits
32%
37%
27%
REITs
44%
53%
34%
Equities

Source: SingStat, Oct 2022

All respondents
Male respondents
Female respondents

Chart 7

Inflation & Investing
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