Singapore’s cost-of-living squeeze reaches even affluent households: Sun Life

SINGAPORE: The squeeze of the rising cost of living has reached even affluent households in Singapore.

According to Singapore Business Review, citing Sun Life Asia’s third “Financial Resilience Index: Asia Navigates Rising Costs” report released on Tuesday (June 9), rising living costs have affected all income groups, including high earners.

Among high-net-worth individuals (HNWIs) earning at least S$250,000 a year, nearly eight in 10 (76%) said inflation made it more difficult to cover their monthly expenses, while nearly six in 10 (59%) said they would likely need to make moderate to significant changes to their lifestyle if living costs continue to rise.

Still, seven in 10 HNWIs reported feeling financially secure. Nearly three in 10 (27%) also believe they could last a year without income.

The share of highly resilient households in Singapore fell to 21%, from 34% last year. Low-resilience households also more than doubled to 20%, from 9% a year earlier.

Highly resilient households were defined as those that feel financially secure, plan at least five years ahead, are prepared to cope with a financial emergency, consider themselves financially literate, and are confident of meeting their long-term financial goals.

Low-resilience households, meanwhile, tend to feel financially insecure, plan only a few months ahead or not at all, are unprepared for financial emergencies, rate their financial literacy poorly, and lack confidence in achieving their long-term financial goals.

The report also found that only one in 10 respondents feels very secure financially, compared to two in 10 last year.

Rising everyday costs, including groceries (95%), utilities (94%), transport fuel (92%), cooking fuel (91%) and healthcare (91%), remain the biggest concerns among households. Over the past six months, respondents said the costs of food and groceries (80%), utilities (58%) and transport (55%) increased the most.

When asked about their top financial priorities over the next 12 months, they cited daily expenses (55%), retirement savings (44%) and building an emergency fund (37%).

More than half (52%) of respondents also said the rising cost of living remains a barrier to improving their financial control. 

While 69% believe having sufficient savings is critical to achieving financial security, only 41% said they could survive without income or external support.

Respondents said they have been cutting back on non-essential spending (54%), tapping into their savings (24%), reducing essential expenses (24%), and pausing retirement contributions (14%) to cope.

Still, those with higher financial literacy were found to be more confident (+44 percentage points) and more optimistic (+41 percentage points) about their financial future, although seven in 10 respondents rated their financial literacy as basic or below basic.

In terms of financial decision-making, 53% use generative artificial intelligence (AI) tools occasionally, with usage expected to rise to 55%. Among HNWIs, 74% already use the tool regularly, while 69% expect to use it more. /TISG

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