Retirement in Singapore – Expectations vs Reality


With over 300,000 Singaporeans aged between 50-54 due to retire in the next 10-15 years, retirement planning is surely and steadily catching on as a financial trend, and rightfully so. For a city running on the constant consumption mantra of the West and sky high living costs to boot, retirement finances seem to be the only savings strategy that most people can consciously root for.

In a recent study conducted by HSBC bank, over half of the middle income earning survey participants admitted that their retirement planning was not sufficient to meet their savings goals, and they may have to soldier on working past the age of 65 in order to enjoy a decent lifestyle.

The top three fears related to retirement most commonly cited by Singaporeans were:

  • Inadequate healthcare financing
  • Unpaid loan debts
  • Inflation in real estate and lack of job opportunities due to immigration growth

Even the emerging affluent class of workers are unable to start saving early due to the barrage of housing loan and personal loan debts they have to face in the early part of their career. By the time, they begin saving sensibly for retirement, it’s too late.

Another survey conducted by DBS with a sample size of 800 Singaporeans revealed that 73 per cent of participants aimed to retire between 55 and 65, with a savings amount ranging from $570,000 – $575,000.

Over 85 per cent of participants claimed that they would be comfortable living with a monthly retirement income of $3,500 for 15-20 years. However, the results shed light on a stark gap between the polling stats, because the average savings would dry up within 13 years and fall short of the average life expectancy rate in Singapore.

A Game of Financial Priorities

Retirement planning, as it turns out, is a rather subjective financial priority for Singaporeans. While there are early planners who begin laying the foundations for it at the age of 28, there are some who ride it out and start saving for it in their early 40s.

For many people, it falls low on the savings priority ladder simply because they have issues like paying for their child’s education that they need to address first, or they just can’t compromise on their lifestyle expenses so they choose to be ignorant.

The ambiguity of investment returns is another important factor that affects Singaporeans in a detrimental way when it comes to saving for retirement.

In a survey that studied three different categories of people and aimed to identify their savings priorities, the following results were observed:

  • Working singles aged 35-49 allocated 51 per cent of their earnings towards investment and savings.
  • Working singles aged 18-34 allocated 44 per cent of their earnings in investment and savings.
  • Married people aged 25-62 allocated 43 per cent of their income towards servicing their investment and savings, with the majority of their income being used to pay off loans.

The majority of Singaporean respondents seemed to be content leaving their retirement income to be primarily dependent on their Central Provident Fund, insurance, investments and annuity plans.

Lessons to Learn

Ultimately, retirement planning strategies are different for people with different lifestyles. It’s subject to individual expectations of how they see themselves settling down in the yonder years of their life. There are some people who wish to spend their savings settling down in a grand villa on their island paradise of choice. On the other hand, there are some people who went way too far in materialistic indulgences in their younger years and must continue working longer to sustain their lifestyle.

We know that the average life expectancy in Singapore has elevated significantly over the past couple of decades, and both males and females are living longer and healthier lives than ever before.

Hence, if you desire to retire at the age of 65, then you need to have a savings plan that can cover you for at least 20 years till you are 85. Medical care takes up a significant chunk of an individual’s savings in their retirement years due to the increased prevalence of illness and injury.

As you can see, it is extremely beneficial to start as early as you can so that you don’t have to carry the burden of unpaid loans and bills on your wary shoulders. 

What do you think?