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Business Times - 18 Jun 2011

Retirement: What S'poreans have and what they think


SINGAPOREANS with retirement financial plans have almost twice the amount of retirement assets than those without. This figure is slightly lower than the global average of 245 per cent. Yet, only 58 per cent of the 1,046 local residents surveyed by HSBC Insurance have retirement financial plans in place.

The online survey, conducted in 17 countries with more than 17,000 participants between the age of 30 and 60, found that people have a positive image of retirement, with nearly half of the respondents associating retirement with freedom.

Fear of unforeseen events consuming their savings and the cost of ill health are the top concerns for Singaporeans, reported HSBC Insurance.

Singaporeans are also aware of the demographic challenges of an ageing population and longer life expectancy. Among the Asian countries surveyed, Singaporeans are the most concerned about costs of caring for older parents.

Although Singapore has the well-established Central Provident Fund (CPF), Walter de Oude, CEO of HSBC Insurance Singapore, feels the CPF payout alone would be insufficient.

'If a 65-year-old has S$150,000 in his CPF, he can expect to receive about $1,400 every month from CPF Life,' said Mr de Oude. 'In order to receive a monthly income of S$3,000 during retirement, he will have to have supplemented his CPF savings with another investment.'

'The need to start early on financial planning has been the predominant need,' added Mr de Oude.

However, the people who would typically benefit most from early retirement planning are also the most apathetic. According to the survey, a large portion of people in their 30s do not believe financial planning would be useful.

Half of the respondents expect to have a more comfortable retirement than their parents did. However, 16 per cent of Singaporeans surveyed admitted that they do not know what their main source of income would be in retirement.

Twenty per cent of Singaporeans expect to be reliant on savings and investments, while 15 per cent of respondents expect to keep working. This is nearly twice the global average, suggesting that for many Singaporeans, the idea of working longer is their mechanism to cope with increasing longevity.

Among the high number of individuals without a financial plan, the overwhelming reason cited was that they lack sufficient funds to do so (62 per cent) and 23 per cent do not know how to go about making a plan. Others reported they do not have time to seek financial advice.

However, setting aside time to speak with a financial advisor might be worthwhile. The survey found that, globally, those who take advice and have financial plans have amassed over 31/2 times the retirement assets and five times the non-retirement assets of those who do neither.

sounds like an advertisement for financial planners...
CPL Life is also retirement plan