Singapore’s millennials focus much more than just updating their Instagram feeds—they’re busy saving up 20 per cent of their salaries for their future retirement, reveals a survey from Syfe.
The new research by investment advisory firm Syfe also found they could save more money than respondents from older age groups.
The results of the Syfe Retirement Readiness Index (SRRI) published on Wednesday (Dec 4) polled 1,000 working adults in Singapore aged 25 to 60. There were 319 Millennials aged 25 to 34 as respondents.
Singaporeans’ retirement readiness
The Index used an algorithm to calculate each person’s preparedness based on their income, savings, investments, homeownership, lifestyle expectations and needs.
Each respondent was given a retirement readiness score, ranging from high (over 130), adequate (between 100 and 130), low (70 to 99) and very low (below 70).
Singapore’s median SRRI score is 82, which falls in the low category of the overall retirement readiness. Out of all the participants, 60 per cent scored below 100.
Millennials are “adequately” prepared
However; millennial respondents scored differently—the report notes that more than 60 per cent of respondents aged 25 to 34 had “adequate” levels of retirement readiness, provided they can maintain their current rate of savings and relatively low debt levels.
In fact, the report stated that a high percentage of millennials—63 percent—saved at least 20 percent of their salaries, far higher than respondents from older age groups (ages 35 to 60).
In terms of the total number of respondents, less than half saved 20 per cent or more of their salary.
The retirement readiness of the Millennials could be affected by certain changes, such as homeownership, children and taking care of older parents. These could contribute to lower savings and higher debt.
Having fewer financial responsibilities is allowing millennials to save a higher percentage of their salaries. Syfe cautioned that millennials “should aim to save as much as possible in their 20s and early 30s, and consider investing the surplus”.
The report found that homeownership, long since touted as an indicator of success, negatively affected retirement readiness. Almost 30 per cent of homeowners surveyed save less than 10 per cent of their salaries and have a very low SSRI score of 43, thanks to ongoing mortgage payments.
The unprepared segment
In order to qualify as “adequately prepared” for retirement, the ideal percentage each person should save is at least 30 per cent or more of his or her total salary.
Respondents who saved under 10 per cent of their salaries are generally unprepared for retirement and would have to downgrade their lifestyle to match their savings.
Syfe’s index also covers on respondents thought of their personal retirement readiness.
It says 70 per cent of respondents (and 60 per cent of Millennials) did not think they will be able to maintain their current lifestyles when they retire.
“The Syfe Retirement Readiness Index is a wake-up call for everyone to start taking their retirement plans seriously. – Dhruv Arora, founder and CEO of Syfe.
Unfortunately, misconceptions about expectations in retirement and a lack of real financial literacy have left many in a difficult position where they may not be able to reach their own goals, “often without them even knowing,” he says. /TISG