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The Financial Wellness Index in Singapore has fallen for the second consecutive year, reaching its lowest score of 60 since its inception in 2023, according to a study conducted by OCBC. The study, which surveyed 2,000 citizens and permanent residents aged between 21 and 65 across ten financial wellness pillars, identified retirement planning as the most neglected area.
The survey found that working adults in Singapore have been deprioritizing retirement planning due to inflation, high-interest rates, and fears of an economic slowdown. Only 60% of respondents were actively planning for their retirement, a decline from the previous year. The average starting age for retirement planning has been postponed to 42 for those in their 20s and 60 for those in their 50s.
Falling investment returns in 2023 and decreased savings – now making up only 25% of income – have negatively impacted contributions to retirement plans. This has further affected the ability of these individuals to meet lifestyle aspirations during retirement. Over half of the respondents also reported struggling to build an adequate emergency fund.
“The good financial habits persist despite the financial pressures,” Tan Siew Lee from OCBC noted. These habits include better debt management, with more people paying monthly mortgage installments on time, reducing discretionary spending, and continuing to save regularly, albeit in smaller amounts.
In a concerning trend among Singapore’s Gen Z and millennials, the OCBC survey revealed an increasing reliance on social media platforms such as TikTok and WhatsApp for investment advice. This trend has led to financial blind spots resulting in poor returns averaging 0.4%, due to exposure to poorly performing foreign equities and international stocks influenced by short-term price fluctuations.
Non-traditional investments like cryptocurrencies have also seen a decline in popularity among these younger investors. Despite these challenges, more Singaporeans managed to repay their housing loans and other personal debts on time in 2023, indicating some resilience amid financial pressures.
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