One in two millennials in Singapore have started saving for the future, ahead of any other generation. But what they’re planning to spend on is vastly different from other generations.
To millennials, saving up to buy a house is more important than saving money for retirement, at least according to a report by Manulife.
The study, which was published on Nov 1, found that the majority of millennials here prioritise spending on short-term goals over saving for retirement.
The survey polled 500 millennials aged 21 to 34, 410 Gen Xers aged 35 to 49, and 90 baby boomers aged above 50, in Singapore.
A millennial is a person reaching young adulthood in the early 21st century; Gen Xers are born roughly from the early 1960s to late 1970s; baby boomers are born in the years following the Second World War, when there was a temporary marked increase in the birth rate.
The study found that millennials in Singapore are super savers as it turns out that 55 per cent of those surveyed were already saving up for the future. On average, they started doing so at the age of 27.
In comparison, the average Gen Xer started saving for retirement at 35 and a majority of baby boomers only started close to 40. In fact, a worrying one out of four respondents aged 50 and above has not started planning or saving for retirement, citing not having extra money as the main reason.
However, millennials placed more importance on saving for their first home over saving for retirement, Manulife said. Across the board, all respondents cited buying a house as a top priority, with retirement being a higher priority than having their first child.
The study also found that millennials are spending 45 per cent more than the other two generation groups on their respective life stage goals – which the study picked out to be furnishing their first houses and buying their first cars.
On top of saving up to buy a house, millennials have splurged, or are planning to splurge, an average of around S$177,000 (USD$129,000) on furnishing their first houses, and over S$209,000 on buying their first cars.
In comparison, Gen Xers and baby boomers have spent, or are planning to spend, a lot less than millennials on these two areas.
Gen X respondents have spent, or are planning to spend, around S$58,000 less than millennials on furnishing their first houses, and S$65,000 less than millennials on buying their first cars.
Similarly, baby boomers have spent, or are planning to spend, around S$25,000 less than millennials on furnishing their first houses, and S$68,000 less than millennials on buying their first cars.
The study also found that the average millennial wants to have more retirement money, yet wants to work less than previous generations.
Millennials expected themselves to need over S$1.4 million in savings to enjoy their desired lifestyle in retirement, while Gen X respondents expect themselves to need S$1.34 million and baby boomers, S$1.27 million.
Even so, most millennials surveyed also said that their ideal retirement age is 57, as compared to 60 for the Gen Xers and 65 for the baby boomers.
In response to the results, Kwek-Perroy Li Choo, chief customer officer and chief transformation officer of Manulife Singapore, said: “To continue living the life they (millennials) want, it is necessary to help them understand what options they have at their disposal when it comes to retirement planning and planning for the future.”
“Once millennials have more insights into the cost of their retirement and how to achieve it, they will be able to take the necessary steps along their life journeys to get to where they want to be,” she added.