Over 40% of Singaporeans think they will never achieve financial freedom: Singlife poll

Summary

Highlights

• More than 40% of Singaporeans think achieving financial freedom is out of reach 😢
• A whopping S$612,000 is deemed necessary for financial freedom 🤑
• Singaporeans anticipate a 30-year journey to financial freedom 🌟
• Rising costs, insufficient income, and unforeseen expenses are main barriers 🚪
• Need for more financial literacy and better investment options emphasized 📚
• Children and high living costs factor heavily into financial planning 👶🏠

Key Takeaways

• Over 40% of Singaporeans doubt achieving financial freedom 😮
• Financial freedom estimated at S$612,000, an 8% rise 📈
• 30 years is the expected timeframe to save up 💰
• Major obstacles: low income, unexpected expenses & job insecurity 🚧
• Many know the path to financial freedom, yet fears linger 🌧️
• Costly living impacts financial optimism in Singapore 🇸🇬

Overview

Chapters

• 00:00 - 00:30: Introduction and Survey Findings The chapter titled 'Introduction and Survey Findings' discusses the topic of financial freedom in Singapore. It begins with a broadcast segment from Singapore Tonight, revealing that over 40% of Singaporeans feel they may never achieve financial freedom. This insight comes from a survey involving 3,000 participants, including Singaporeans and permanent residents aged between 18 to 65. The survey is part of the Singlife Financial Freedom Index for the year, which indicates that people believe they need approximately S$612,000 to reach financial freedom—a figure that has grown by 8% compared to the previous year, and is estimated to take 30 years to save. Only 29% of the survey respondents feel they are on track to meet this goal.
• 00:30 - 01:00: Roadblocks to Financial Freedom The chapter titled 'Roadblocks to Financial Freedom' discusses the perception and reality of achieving financial independence. A significant portion, 44%, feel they might never reach this goal due to several hindering factors like insufficient income, unforeseen expenses, and job insecurity. However, over 25% claim they have reached financial freedom. The chapter identifies six key themes that impact one's journey to financial autonomy, including having enough money to live comfortably.
• 01:00 - 01:30: Key Themes and Cost of Living The chapter "Key Themes and Cost of Living" discusses the financial challenges associated with maintaining a stable income stream during retirement, paying off bills and expenses, and the aspiration to leave an inheritance despite a higher cost of living. It emphasizes how increased living costs and inflation impact the ability to save money, leading to a decline in savings. Strategies or potential solutions to overcome these financial hurdles are explored.
• 01:30 - 02:00: Parenthood and Financial Planning The chapter discusses the financial aspects of parenthood and highlights survey results regarding the costs associated with raising a child. The survey indicates that many believe it costs over S$500,000 to raise a child until the age of 21. Over half of the respondents do not plan to have children, and among those who already have one child, 80% do not wish to have more. Additionally, more than 40% perceive significant financial challenges in this regard.
• 02:00 - 02:30: Retirement Goals and Preferences A significant number of individuals feel their children's needs may postpone their retirement by up to 15 years. Despite this, 80% of people still hope to retire by the age of 65. Many feel they need more than S$2,800 monthly for comfortable post-retirement living. There is also interest in retiring abroad to countries such as Malaysia, Australia, New Zealand, or Thailand, due to lower living costs and more favorable climates.
• 02:30 - 03:30: Interview with Dr. Aurobindo Ghosh The chapter involves an interview with Dr. Aurobindo Ghosh, an expert in finance and director of a financial programme at SMU. The main discussion revolves around a survey indicating that most people prefer to retire in Singapore. Respondents suggest that S$612,000 is the required amount for financial freedom, marking an 8% increase from the previous year's survey. Dr. Ghosh is asked to provide insights into why respondents feel that this specific amount is necessary for achieving financial freedom.
• 03:30 - 04:30: Factors Contributing to Financial Perceptions The chapter "Factors Contributing to Financial Perceptions" explores how individuals often make financial decisions under uncertainty about the future. It notes that certain figures, such as S$612,000, may appear high because they reflect cautious expectations about potential interest rates or returns on investments. This suggests that people may be anticipating lower yields from their savings or investments when planning financially.
• 04:30 - 05:30: Children in Financial Planning The chapter discusses the role of children in financial planning, noting the impact of recent global economic changes such as the pandemic and inflation. It highlights how these factors have increased the cost of living, affecting financial planning strategies. Despite a recent downward trend in inflation rates, a more pessimistic outlook is presented, suggesting caution in future financial planning involving children. The summary underscores the necessity to adapt financial strategies to current economic conditions, ensuring that long-term planning can accommodate both rising costs and market fluctuations.
• 05:30 - 06:30: Policy Implications and Government Role This chapter discusses the role of policy implications and the government in addressing the distribution of wealth and its impact on the cost of living for citizens. Despite the presence of a high percentage of millionaires in the country, many citizens struggle with the cost of living. This disparity highlights issues in wealth distribution and the socio-economic challenges faced by the wider population.
• 06:30 - 07:30: Retirement Planning Strategies The chapter 'Retirement Planning Strategies' explores the disparity between the incomes of entrepreneurs and fixed-income earners in a capitalist society. It acknowledges this issue while highlighting available benefits for addressing it. The focus is on encouraging individuals to explore various options, such as the CPF (Central Provident Fund), for better retirement planning and financial security.

Over 40% of Singaporeans think they will never achieve financial freedom: Singlife poll Transcription

• 00:00 - 00:30 Welcome back to Singapore Tonight. More than  four in 10 people in Singapore say they may   never be able to achieve financial freedom. This  was revealed in a survey of 3,000 Singaporeans   and permanent residents aged 18 to 65.  In this year's Singlife Financial Freedom Index,  respondents believe they need around  S$612,000 to be financially free - 8% more than   last year's figure and it would take them 30 years  to accumulate that amount. Only 29% of respondents
• 00:30 - 01:00 say they will be able to achieve financial  freedom. 44% believe they will never achieve this. Major roadblocks include insufficient  income, unforeseen expenses and job insecurity.   Over a quarter say they are currently financially  free. The survey identified six key themes affecting   the ability to attain financial freedom and some  of these include having money for a comfortable
• 01:00 - 01:30 retirement, a stable income stream, being able to  pay off bills and expenses, and the ability to pass on an inheritance. You have a higher cost of living,  obviously the amount of money that you can   save, beyond whatever the experienced inflation  is or experienced cost of living is, is going to   be lower. So that might be one of the reasons that there is a slight decline in the savings   of those, of anyone for that matter during that  period. The only way of sort of avoiding that
• 01:30 - 02:00 is to have longer term positions on things which  might be able to hedge or reduce the impact of inflation. Touching on parenthood, those surveyed  believe it takes more than S$500,000   to raise a child till the age of 21. Just over half  say they do not intend to have any children and   among those with at least one child, 80% say they  do not want any more. More than 40% believe having
• 02:00 - 02:30 children will delay their retirement age and the  ability to achieve financial freedom by up to 15 years. When it comes to retirement, four in five aim  to retire by 65. Most believe they need more than   S$2,800 a month to live comfortably. Some expressed  interest in retiring to countries like Malaysia,   Australia, New Zealand or Thailand, citing reasons  like lower cost of living and better climate.
• 02:30 - 03:00 The majority say they prefer to retire in Singapore.  For more analysis on this, we're now joined   by Dr Aurobindo Ghosh, he is assistant professor  of finance and director of the SMU Financial   Literacy, Inclusion and Technology Programme.  Professor Ghosh, welcome to the programme. So first   of all prof, help us understand why respondents  feel that around S$612,000 is the amount necessary to achieve financial freedom? Because  that's an 8% jump from the amount in last year's survey.
• 03:00 - 03:30 That's correct. Thanks for having me.  One of the challenges that is there is that we   make decisions based on levels of uncertainty  we have about the future, so the number S$612,000   seem to be on the higher side - meaning that they  are probably looking at interest rates they can   possibly get or returns they can possibly get on  their nest egg is sort of lower than what
• 03:30 - 04:00 might be available. In some sense, I think part  of the reason is probably a higher cost of living   that they experienced over the last few years  after the pandemic, but inflation rate across   the globe is seems to be coming down and we  expect to kind of moderate further along the way.   We see core inflation already coming down quite  a bit but the headline rates are also coming down.   So indeed I think in a way it is probably a little  more pessimistic view than an optimistic view of
• 04:00 - 04:30 the world, but there are some struggles on  cost of living that you are seeing   for citizens, that's quite correct. So as you said prof, it is a pessimistic view but how   is it also possible in a country that has one of  the highest percentages of millionaires in the world? Well, this is of course the  whole nature of how wealth is distributed.
• 04:30 - 05:00 Obviously, entrepreneurs and innovators  and business owners will be making a lot more   money and then of course employers, and fixed  income earners will be earning a little less.   That is part and parcel of the capitalist  society that we live in across the globe.   So indeed that is definitely an issue. But at the same  time, I think there are significant benefits that   are available. So when I'm talking about pessimism,  it might be that people are not really accessing   all the different options available to them.  So CPF definitely is one of them which is giving
• 05:00 - 05:30 you a risk-free access to returns. There  are also long-term investment options that are   available, which gives much higher return than what  is predicated by the S$612,000 that they are talking   about. So indeed I think having more information  and having more knowledge and maybe more financial   literacy about what are the investment options is  a better way of preparing for their retirement and   be less concerned about it. So it's quite perplexing prof, because the survey found
• 05:30 - 06:00 that more than half of respondents said they  actually know how to achieve financial freedom   but only over a quarter said they  are currently financially free. So if   they know how to be financially free,  what is stopping them from achieving that? So I think of late the higher cost of  living might have played a role. So as you   know, when we put money in a bank  or any other account we get a nominal return but   the real return is really the difference  between the nominal return and the inflation rate.
• 06:00 - 06:30 So that inflation rate, if people perceive that  inflation rate is too high, then their real return   which is the rate of change of purchasing power  in their perception changes. So obviously when   inflation comes down, the real return is closer  to the nominal return and that will actually   of course help them go over bumps in terms of  cost of living and other issues as well. So indeed,   I think they know what the targets are to some  extent. Obviously, I'm sure they're accessing more   financial health, personal finance modules  and other things available but at the same
• 06:30 - 07:00 time they're concerned that to get a sustained  return for a long time in a level of uncertainty   that we see might be a little challenging, so  they're also a little afraid of the uncertainty   that can come in due to conflicts, separation between bipolar world and so on. An interesting aspect of the  index also include children - they are being   factored into financial planning for retirement  or rather they are being factored out of it.   Is that a sound strategy in your opinion,  do you think it's a good investment plan?
• 07:00 - 07:30 So we have to look at it in a broader  and holistic sense. So if you can think of it,   so of course Singapore we are a city state,  which is one of the reasons why our birth   rate is probably naturally lower because people  are busy, there is no other place in the   country to sort of retire in some sense. So that  is causing a little bit of anxiety as I mentioned   to you. And the cost as I mentioned,  across the board cost of education might be
• 07:30 - 08:00 going up over time in some sense but at the  same time when you are investing prudently those   aspects, those costs are taken care of but  more importantly I think there is a lifestyle   choice that needs to be made as well in  a more sustainable way. So I don't think that   children can be taken as a cost per se, there  are significant social development - you know how   people can age more actively where children  needed rather than having only older folks
• 08:00 - 08:30 or more older folks. So there are lot of other  social aspects to it that has to be looked at as   well when we think about whether to have  a family or children as well. And with all of this information, how can it really help guide policy for Singapore - are we perhaps looking at a possible increase in government expenditure to  support people who are unable to achieve financial freedom? There are of course plans. As I mentioned  CPF already before. So having access to all this
• 08:30 - 09:00 plan, annuity CPF and see exactly what are the  things that are needed as and available. And   then also look at what their financial goals  and targets are, how soon they want   to retire like the so-called financial freedom  that is mentioned and also talked about quite   regularly and what type of lifestyle  you want to lead post retirement so one very   important part that we have to kind of understand  that when we are retiring we don't really have to   save for retirement anymore. So you don't have  even if you look at the 50-30-20 scale that
• 09:00 - 09:30 often times people look at in terms of saving,  like 50% on essential, 30% on discretionary and   20% saving, that 20% is not really needed so you  really need about 80% of your current income in   order to retire and maintain similar levels  of living. But obviously we don't have to do a   lot of things, like we don't have to commute to  work and all those things as well, so there are   ways of prudently looking at what your actual  consumption basket looks like and then prepare   according to that. So planning is definitely  important, understanding needs and wants is very
• 09:30 - 10:00 important and I would say at the end of the  day, investing is very important too. Professor Ghosh, thank you very much for sharing your insight.  That was Dr Aurobindo Ghosh, assistant professor   of finance and director of the SMU Financial  Literacy, Inclusion and Technology Programme.