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Beware The Dangers Of Retirement Gap With 4 Lessons From Manulife Retirement Survey

In Q1 this year, Manulife released the results of its retirement survey. The goal of the survey is to understand Singaporeans’ priorities and attitudes towards retirement saving. Manulife polled a total of 1,000 Singaporeans between the age of 21 to 60 across a spectrum of working adults, pre-retirees and retirees.

So, we took a peer into the findings and found 4 important lessons that everyone who is looking forward to retiring should beware of. Here is a summary of the 4 lessons learnt and why it matters to you.

Manulife Survey: 4 Lessons That Makes You Rethink Your Retirement Planning

  1. Retirement Gap Is ~$700k On Average With Confidence Of Retiring At All-Time Low

When we talk about retirement, the first thing that comes to mind is savings. That’s because you need to have enough retirement savings to sustain your retirement lifestyle, especially if you want to retire early and enjoy your retirement life on the beach just staring at the ocean all day.

Based on Manulife’s survey, most respondents expect to retire with $1.1m of retirement savings to support their retirement lifestyle. Unfortunately, the reality is far from that. For current retirees, the average retirement savings is only $600k. For pre-retirees, the average retirement savings is only $423k. It is even lower for working adults who have not even started thinking about retirement.

It is no wonder why the confidence of retiring is at an all-time low with 1 in 4 retirees not confident in living out the rest of their retirement in comfort, according to Manulife.

  1. Falling Standard Of Living After Retirement

The retirement gap is not the only problem that Singaporeans face when it comes to retirement. The follow-on problem of the retirement gap is also pretty obvious: Falling standard of living after retirement.

Because of the retirement gap, 37% of respondents feel that their standard of living will inevitably taper off post-retirement. Worse still, almost two-thirds of Singaporeans expect to continue working in retirement. Some reasons cited by the respondents include:

  • High cost of living in Singapore (65%)
  • Insufficient income (49%)
  • Unexpected expenses and expenditure (44%)

This is a very worrying sign for many of us who were initially looking forward to more enjoyment in our retirement years.

  1. Regret Not Planning For Retirement Earlier

As expected, because of points 1 and 2, many respondents regret not starting their retirement saving earlier and being more aggressive with their saving.

1 in 5 retirees were not satisfied with the amount they saved for retirement whereas 2 in 3 pre-retirees aren’t confident of being able to save enough for retirement. As such, 1 in 3 pre-retirees and 2 in 3 retirees wished they had started retirement planning earlier.

Indeed, the regret of not starting retirement planning and saving early is very real. Unfortunately, most of us only realize this when we are close to the finishing line, i.e. when we are about to retire.

  1. Key Challenges Of Retirement

Besides touching on the current state of retirement planning for Singaporeans, the survey by Manulife also went into uncovering the key challenges of retirement.

They found that there were two main categories of challenges that Singaporeans face when it comes to retirement: Savings and retirement. Here’s a quick look at them and some simple tips on how you can overcome them.

Savings Challenge
How To Overcome It?
Singapore is too expensive to retire in You can either:

1.      Choose to retire overseas in a place with lower cost of living

2.      Start your retirement savings earlier

Income is not sufficient to cover your cost of living, let alone supplement your retirement Start your retirement savings earlier so that you have more time to accumulate
Unexpected expenses and expenditures Ensure that you have sufficient coverage to transfer the risk of unexpected expenses to your insurer

 

Retirement Challenge
How To Overcome It?
Having to continue working after retirement to increase retirement savings Plan for your retirement early to avoid being disappointed with your retirement savings when the time comes.
Decline in standard of living after retirement
Regret not investing in a retirement insurance plan Invest in a retirement plan when you can financially afford one
Learn From The Retirement Lessons Of Others

While the facts about retirement from Manulife’s survey can be daunting and scary for many of us, it is a reminder for us to learn from the retirement lessons of others before it becomes too late for us. Facing it straight on will be challenging for a start, but it will benefit your own retirement in the long run.

Not sure where to start with retirement planning? Let us help you do a comprehensive financial review to identify where your retirement gaps are. We will then provide you with recommendations on what you need to do to bridge those retirement gaps

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