SINGAPORE: In a recent survey by Prudential Singapore that was published by the Singapore Business Review, it was revealed that a significant 61% of individuals in Singapore are relying on their Central Provident Fund (CPF) to support their healthcare expenses as they age.
However, experts caution that this dependence on CPF alone may not be sufficient to meet future healthcare costs.
Who’s relying on CPF?
Among the individuals who plan to tap into their CPF savings for healthcare needs, Generation X (those born between 1965 and 1980) and Baby Boomers (born between 1946 and 1964) comprise the largest portion.
Specifically, 70% of Gen X respondents and 66% of Baby Boomers indicated that they would depend on CPF to cover their medical expenses in the future.
However, as these generations approach retirement age, experts are concerned about the adequacy of CPF funds to cover the increasing healthcare costs.
The rising expenses, particularly outpatient care and long-term treatment for chronic conditions highlight the need for more comprehensive financial planning.
Millennials turning to insurance for healthcare coverage
While CPF remains the top source of healthcare funding for many, 53% of Singaporeans anticipate relying on health, life, or other insurance plans to meet their future medical needs.
Millennials (born between 1981 and 1996) are leading this trend, with 61% indicating they plan to use insurance as a primary means of covering healthcare costs.
This shift reflects an evolving attitude toward proactive healthcare planning, with younger generations increasingly aware of the importance of insurance products in providing a safety net for their health needs.
However, the reliance on insurance alone may still leave gaps, especially as individuals face rising premiums and coverage limitations.
Cash savings – a popular option but insufficient for long-term care
In addition to CPF and insurance, 59% of Singaporeans are looking to rely on their personal cash savings to meet future healthcare costs.
However, the survey also uncovered a concerning statistic: only 46% of respondents are actively saving money to prepare for these future health expenses.
“This is worrying,” said Prudential Singapore in a statement.
“Out-of-pocket healthcare payments, particularly for outpatient care, can accumulate over time, especially for individuals with chronic conditions who need long-term treatment.
Without adequate savings, individuals may find themselves facing financial strain during retirement.”
Need for a diversified financial plan
Experts emphasize that relying solely on one funding source for healthcare may leave individuals vulnerable.
With healthcare costs rising across the board, a multi-pronged approach that combines CPF, insurance, and personal savings is essential to ensure financial security in the later years of life.
Prudential Singapore urged individuals to start planning early, invest in comprehensive insurance coverage, and build up their savings to safeguard against unexpected healthcare expenses.
Only by adopting a diversified financial plan can Singaporeans better navigate the challenges of an ageing population and the increasing healthcare costs.
As the healthcare landscape continues to evolve, it’s clear that proactive planning will be key to ensuring a comfortable and financially secure future for all generations.