That nest-egg you're setting aside is too tiny
IF YOU think you are saving enough for retirement, think again. A survey conducted by DBS Bank this year found that young professionals in Singapore may not be able to retire with as much as they had hoped.
Approximately three-quarters of the 800 "emerging affluents" polled underestimated the amount they would need to retire.
More than half of those polled - 65 per cent - were aged between 18 and 34 with a personal monthly income of more than $2,500, while the remaining 35 per cent of respondents were 35 and over with each earning more than $5,000.
Seventy-three per cent of respondents planned to retire between the ages of 55 and 65, each with average savings of $571,715.
Meanwhile, over 85 per cent of respondents expected to live on a monthly retirement income of $3,500 each for the next 15 to 20 years and more.
This would translate into a retirement fund that would last them for only 13 years, a few years short of the average life expectancy for some in Singapore.
The official retirement age in Singapore is currently 62. However, bosses must now offer healthy workers, who have performed satisfactorily, re-employment from the ages 62 to 65, or give them a one-off payment.
Walter Edgar Theseira, an assistant professor of economics at Nanyang Technological University, said that many didn't know about their life expectancy and were therefore not saving enough.
"Most people don't really have a good sense of how long they are going to live. They form expectations based on their parents and grandparents, which will not give you the right life expectancy, especially in developed countries like Singapore where it is much higher," he said.
Another reason why young professionals, especially, might not be saving enough for a rainy day is the change in mindsets as compared to that of the older generations.
Said CIMB economist Song Seng Wun: "The consumerist culture is much more prevalent among the youth. Unlike their parents, things have become a lot easier, so they don't have the same motivation and need to set aside funds for the future."
The survey also showed that consumers found the concept of retirement planning complicated and, consequently, put off acting on it.
Though 76 per cent of respondents said that providing for retirement was a priority, only 49 per cent had a financial plan in place.
According to the poll, other barriers to retirement planning included an unwillingness to compromise on lifestyle, as well as financial priorities such as children's education or a housing loan.
Account manager Audrey Khang is one such young professional. She prefers to save her money to travel at least twice a year.
"At this point in my life, I want to see the world as much as I can instead of saving for retirement.
"That is something I will think about in five years' time," said the 26-year-old.