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More Singaporeans manage debt better but retirement plans on backburner: OCBC survey
The OCBC survey also found that just 40 per cent of Singaporeans can afford to spend beyond the basics most of the time.
SINGAPORE – More Singaporeans are managing their debt better amid the current high interest environment but retirement plans have been put on the backburner, a new survey by OCBC has found.
The annual OCBC Financial Wellness Index released on Wednesday (8 November) showed that almost two-thirds (64 per cent) of Singaporean homeowners are on target with paying off their monthly mortgage instalments, compared to 60 per cent in 2022.
However, nine per cent of 2,000 working adult Singaporeans aged between 21 and 65 years old – surveyed in August 2023 – said that they may be forced to sell off or downgrade due to an incapability to sustain their loan.
Fewer Singaporeans (28 per cent) have unsecured debt like credit card or education loans, down from 31 per cent last year. Among those who have unsecured debt, 40 per cent are borrowing only what is needed compared to 21 per cent in 2022.
OCBC Financial Wellness Index at all-time low
This year, the Index recorded its third consecutive dip to an all-time low of 60. The Index is based on 10 pillars of financial wellness as defined by the Bank’s wealth management experts. These 10 pillars are: Saving Habits, Protection from Financial Emergencies, Regular Investing, Retirement Planning, Regular Reviews, Gambling Habits, Excessive Speculation, Borrowing Money, Spending Beyond Means and Manageable Debt. To assess how respondents fare on these 10 pillars, 24 indicators – standards and guidelines that are widely-accepted best practices in financial planning – are used.
OCBC said that based on the responses against these indicators, a score is calculated for each respondent ranging from zero-100. The individual scores from all respondents are then averaged to come up with the overall Index score.
More Singaporeans pushing back retirement plants
Managing their debt comes with a cost as Singaporeans' retirement plans have taken a back seat.
The "planning for retirement" pillar was the indicator that saw the sharpest decline, from 47 per cent in 2022 to 40 per cent this year.
Some 79 per cent of Singaporeans either do not have a retirement plan or are not on track with their retirement plans. This is an increase from 71 per cent in 2022.
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"2023 has been yet another tough year, with the continuation of high interest rates, inflation and turmoil in the financial markets. All of these are reflected in this year's results, with the Index at its lowest since we started in 2019," said OCBC Head of Group Wealth Management Tan Siew Lee in a statement.
Retirement strategies
With fewer people on track with their retirement plans, more Singaporeans are considering alternative retirement strategies to make up for time.
Around 37 per cent of those who have not started on a retirement plan said they would work beyond retirement age, while 28 per cent said they would retire overseas where the cost of living is lower.
Meanwhile, nine per cent said they would rely on their children to support them in their later years.
The survey also found that just 40 per cent of Singaporeans can afford to spend beyond the basics most of the time, down eight percentage points from 2022.
Around 23 per cent respondents said they can only afford the basics, while another 36 per cent said they have to save up for things beyond the basics.
Fewer investors among Singaporean respondents
Amid the gloomy climate, fewer are investing this year, with only 79 per cent of Singaporeans having investments versus 85 per cent a year ago. The average rate of returns for Singaporean investors was slashed by half for the second year, to 0.4 per cent.
Respondents aged 20s and 30s – young Millennials and Gen Z – had the highest proportion of investors who had losses – some 40 per cent of those in their 20s had negative investment returns.
The proportion of Gen Zs and young Millennials on track with their investment goals has plummeted from 75 per cent in 2019 to 32 per cent this year. OCBC said that this could be attributed to a lack of rigorous research.
One in five investors in their 20s (22 per cent) seek investment-related advice and news only from social media channels and chat groups like TikTok and WhatsApp.
Many young investors in their 20s who lost money may not realise they have a blind spot either, with more than a third (35 per cent) of them actively managing investments on their own, trading daily to profit from short-term price fluctuations.
Despite those shortcomings, Tan said that the silver lining is that Singaporeans are managing their debt better this year and are still saving well.
"These are virtues that Singaporeans must continue to practise, especially given the challenging outlook," she said.
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