Singapore’s younger generations are falling behind in retirement savings, with Gen Z and millennial investors aged 25 to 44 investing the least among all pre-retirement age groups, according to DBS study.
Despite having a longer investment horizon, they allocate only 15% to 17% of their salaries to investments, with over half directed toward lower-yield fixed-income assets.
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The sixth edition of DBS’ Financial Wellness series, which analysed data from two million retail customers, highlighted the financial strain younger generations face due to liabilities such as home, car, and credit card loans.
Those aged 35 to 44 are particularly stretched, with debts slightly outweighing their liquid assets. Balancing responsibilities like raising children, supporting ageing parents, and career progression often leads them to prioritise immediate financial needs over long-term retirement planning.
However, DBS emphasises that younger investors still have time to build their nest egg. By 2030, the bank recommends a retirement savings target of SGD550,000 ($406,477) for those with conservative needs and up to SGD1.3m for those with more aspirational goals.
Retirement Planning in Singapore: Key Findings
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By GlobalDataRetirees aged 65 and older have a stable financial position, with CPF payouts covering 55% of their expenses, but rising healthcare costs remain a significant concern.
According to the 2023 Household Expenditure Survey, healthcare accounts for 11% of expenses for retirees, compared to 6.7% for the general population.
Strategies for a Secure Retirement
DBS recommends several strategies for younger investors to strengthen their financial position:
- CPF LIFE payouts are crucial for retirement, but individuals can increase their savings by setting aside the Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS).
- Younger investors are encouraged to diversify their investments by investing more in equities through unit trusts, ETFs, or insurance plans for higher returns.
- Generating multiple income streams, such as rental income, annuities, and home equity monetisation through lease buy-back schemes or equity products.
- DBS sees a surge in retail investment activity, with nearly one million customers actively investing and insuring, and a doubled year-on-year increase in Regular Savings Plans.
Said Derek Tan, Head of Regional Property Research, DBS Group Research stated: “Across generations, the question of whether SGD 1 million is enough for retirement remains a hot topic. Our study has revealed that early financial planning for a well-structured nest egg can enable individuals to navigate immediate financial priorities while preparing for a fulfilling retirement. However, seniors will need to address the dual challenge of managing rising healthcare costs while ensuring their wealth continues to support a comfortable lifestyle in their golden years.”
The Role of Property in Retirement
Homeownership remains a key advantage for Singaporean retirees, as property accounts for nearly half of household wealth. DBS found that 99.7% of its retired customers have fully paid off their mortgages by age 65, offering them an opportunity to unlock liquidity if needed.
Taking Charge of Financial Future
DBS has reduced the minimum investment sum for three of its digiPortfolios, starting with SGD 100, and reduced fund house fees for its SaveUp and Retirement digiPortfolios.
Additionally, DBS has introduced a “decumulation” feature in its Retirement digiPortfolio, enabling retirees to set up regular withdrawals while ensuring they do not outlive their savings.
As financial pressures mount for younger generations, early and strategic planning will be key to achieving a secure and comfortable retirement.
Lorna Tan, Head of Financial Planning Literacy, DBS Bank shared: “Financial planning doesn’t have to be daunting – it’s about taking small, achievable steps to build a more secure future. At DBS, our role is to cut through the clutter and empower Singaporeans with the right tools, insights, and expert advice to navigate their journey with confidence. We have supplemented this process with four essential money habits: Save, Protect, Grow, and Retire, and their respective rules of thumb. For instance, by adopting the ‘Pay Yourself First’ guideline, setting aside savings before spending, and leveraging the power of compounding through investments, individuals can steadily work towards their retirement goals. This is in addition to CPF – a robust social security savings scheme the government has in place – that will help boost the retirement adequacy among Singaporeans.”
