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Retirees in Singapore face 8 years of hardship after savings run out

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Retirees in Singapore face 8 years of hardship after savings run out
  • Over half inadequately prepared or not preparing at all for retirement.
  • Fears surrounding retirement include poor health and financial hardship, with almost half hoping to continue working past retirement.
  • Majority expects cash savings to fund retirement.

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)

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

Source: The Future of Retirement: A New Reality (February 2013)

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

Income replacement ratios

Source: The Future of Retirement: A New Reality (February 2013)

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 (February 2013)
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

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

Source: The Future of Retirement: A New Reality (February 2013)

Paul Arrowsmith, Head of Retail Banking and Wealth Management, HSBC Singapore said: "There is cause for concern from the finding that the retirement savings of people in Singapore will run out after nine years which is about the time they are entering into frail retirement and a stage of their lives when medical costs and other elderly care expenses are expected to rise."

"This shortfall is exacerbated by an over-reliance on cash savings which will erode one's retirement income amidst today's low interest rate environment and high inflation. There are many ways to deploy one's cash savings more effectively and generate more attractive returns so as to better support one's retirement lifestyle and needs. The advantage of cash is its liquidity which allows for diversification into other asset classes to capture growth opportunities in the market and re-balance one's investment portfolio according to evolving needs and circumstances. Those with a stronger risk appetite can consider multi-asset strategy funds, dividend-paying funds or annuity products to counter inflation while more conservative investors can stay with time deposits in various currencies or fixed income instruments," added Mr Arrowsmith.

Retirement aspirations and fears

Retirees in Singapore face 8 years of hardship after savings run out

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%).

Walter de Oude, Chief Executive Officer of HSBC Insurance (Singapore) said: "Financial planning has become especially relevant as increased longevity and elderly dependency challenge people's retirement nest egg. According to the recent Population White Paper, in 2012, there were 5.9 working-age Singaporeans for each citizen aged 65 and above but this ratio is projected to shrink to 2.1 by 20302. A strong savings culture is no longer sufficient in itself. What is needed is a structured and disciplined approach guided by a professional financial adviser to help people start or catch up on their retirement planning."

"There are readily available products such as annuities and investment-linked policies which grow and accumulate one's wealth while providing insurance coverage at the same time. For example, a 35-year-old male who takes up HSBC Insurance's Growth Manager Plus can expect a cash value of over S$550,000 at age of 65 based on 8% per annum projection by paying S$770 monthly in premiums3. He is also covered for S$150,000 against death, critical illness, total and permanent disability. During frail retirement, a comprehensive plan such as HSBC Insurance's Early Critical Care comes in handy to provide financial protection for up to 90 different types of critical illnesses," added Mr de Oude.

Retirees in Singapore face 8 years of hardship after savings run out

Mr Arrowsmith said: "People are living longer, through tougher economic times, and expectations about their standard of living in retirement have risen. The study has pointed out important shortfalls about people's retirement planning. Better late than never, Singaporeans, regardless of age or income, are not without recourse on what they can do to plug the retirement savings gap and mitigate or even possibly eliminate the negative future scenarios. They should start conversations with their wealth advisers soon to plan out their retirement, one in which they are financially-secure and able to maintain the lifestyle of their choice which HSBC, with our global expertise and insights, is able to leverage our world-class wealth management solutions to help them approach their retirement with confidence."

  1. HSBC’s The Future of Retirement programme is a world-leading independent study into global retirement trends. It provides authoritative insights into the key issues associated with ageing populations and increasing life expectancy around the world. The latest global report, A New Reality, is the eighth in the series and is based on an online survey of 15,866 people in 15 countries. Since The Future of Retirement programme began in 2005, more than 125,000 people worldwide have been surveyed.
    For more information about The Future of Retirement, and to view all previous global and country reports, visit
    Cicero Consulting is a leading consultancy firm serving the banking, insurance and asset management sector, Cicero specialises in public policy consulting as well as global thought leadership and independent market research. Cicero was established in 2001 and now operates from offices in London, Brussels, Washington and Singapore. Visit
    As a market leader in pensions and retirement research, Cicero designed and analysed the research and wrote this report, with Mark Twigg as author and Paul Middleton as research director.
  2. A Sustainable Population for A Dynamic Singapore: Population White Paper, January 2013, page 13, 'Chart 1.5: Declining Old-Age Support Ratio’ on the assumptions of current birth rates and no immigration from 2013 onwards:
  3. Illustration based on a 35-year old male, non-smoker and using the HSBC-Link Asian Balanced Fund as the investment-linked fund.
02 September 2013

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