What are your retirement plans?
In a new survey, almost half of Singapore respondents said they expected their family to care for them in retirement.
The survey conducted by wealth management group St. James’s Place Wealth Management Asia (SJP Asia) found that 46 per cent of more than 1,000 Singapore investors aged 25 to 54 expected their families to take on the responsibility of caring for them in retirement.
Close to half (48 per cent) of all the Singapore respondents – who are all from households with an annual income of S$70,000 to over S$250,000 – also predicted that they would not have enough money saved to sustain the lifestyle they want in retirement.
Many were also worried about becoming a burden to their families.
According to SJP Asia, 66 per cent said they were concerned about being a financial burden to those closest to them, and 13 per cent believed they would not have enough savings and would need to work past retirement age.
More than half (56%) of those who said they would not have enough savings for retirement were between the ages of 25 to 40. But SJP Asia – which provides financial services such as investment and retirement planning – said that these respondents have “a longer time horizon and more earnings potential” and “can do more to improve their financial situation over time”.
A large proportion (42 per cent) of respondents also said they were not sure how much income they would need to maintain their desired lifestyle in retirement.
However, SJP Asia found that the median expectation among respondents was S$3,501 to S$5,000 monthly in retirement, and just over half believed they would need more than S$5,000 per month.
Retirement planning causes significant stress for most
Concerns about retirement planning included a lack of understanding on tax matters and having to make lifestyle sacrifices. These concerns were worrying enough for 57 per cent of respondents to say that retirement planning was a significant source of stress in their lives.
In addition, less than half (44 per cent) of respondents have started retirement discussions with their family members.
Given the expected lack in savings, the respondents indicated they were prepared to make sacrifices in their twilight years, including reducing their expenditure of lifestyle services, luxury goods and travel, downsizing their homes. They were also prepared to spend less on family members.
Spending retirement across the causeway
Over 30 per cent of Singapore investors also said they planned to retire overseas, with most opting for Malaysia (25 per cent), Australia (15 per cent) and Thailand (13 per cent).
More than half of those who wanted to retire overseas cited the high cost of living in Singapore as a reason for doing so. Other reasons for retiring in another country include the desire for a change in scenery (43 per cent) and better perceived benefits for seniors elsewhere (36 per cent).
Plans to pass on wealth to the next generation
Sixty per cent of respondents also said that they had not made plans to transfer wealth and assets to their family. Only 40 per cent intended to do so over the next five to 10 years, while 35 per cent planned to donate a part of their wealth/estate to a philanthropic cause.
Some of the primary concerns around generational wealth are understanding tax implications, understanding inter-generational wealth transfer and the difficulty in apportioning wealth to family members.
Nearly a third of those who found apportioning wealth difficult were worried it would cause disharmony among family members, while 27 per cent were concerned that the next generation would not be able to manage or grow their wealth responsibly.
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