Singapore The Future of Retirement Report Generations and journeys

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1 The Future of Retirement Generations and journeys Singapore The Future of Retirement Report Generations and journeys

2 Foreword Approaches to finances Finances in retirement Practical steps Key findings Priorities and feelings Preparing for the future The research

3 Foreword Over the course of a lifetime, our needs and priorities will change but the things we value in life often remain the same. In our new global report Generations and journeys, the 13th in The Future of Retirement series, we see that ensuring financial security for ourselves and our families is a priority through all stages of life. So although retirement can be a time to enjoy the fruits of our labour with those we hold dear, there are also continuing financial responsibilities. While there is much to learn from today s retirees, younger generations must navigate their own path through the big events in their lives and a changing financial landscape. Starting to save early may no longer be enough to ensure a comfortable retirement, and continuing to save through the ups and downs of life is just as important. Seeking retirement information from trusted sources and personalised advice from professionals remain good ways to prepare for and help deal with the unexpected financial bumps in the road. I hope that the new insights and practical steps in this report will help you on your journey into retirement. Charlie Nunn Group Head of Wealth Management, HSBC

4 Key findings 78% Pre-retirees expect to save for retirement for of people in their 40 s are financially supporting others 9 years longer than current retirees did 23% of working age people have not started saving for their retirement Of pre-retirees who have started saving for retirement, 38% have stopped or faced difficulties Read more

5 Key findings 59% 40% 25% 26% of retirees use cash savings to help fund their retirement of retirees wish they had started saving for retirement at an earlier age of people in their 60s and over expect to move into a retirement home of pre-retirees have never received advice or information about retirement

6 Approaches to finances The research identified five different types of approach to life and finances that affect people's attitudes and behaviour to retirement planning: Strategic Planners Comfortably Affluent Committed Savers Assured Optimists Concerned Realists 31% 14% 20% 12% 23% (27% globally) (21% globally) (20% globally) (16% globally) (17% globally) Typically higher earners who plan early and strategically. They are more able to enjoy the luxuries in life as a result. Tend to be older with financial plans in place. More able to relax and enjoy time with family and friends. Inclined to value saving over spending, but more likely to face struggles along the way. More optimistic about the future, and more likely to have the luxury of being able to take risks while having fun and enjoying life. Have a more pragmatic approach to life and are more likely to be cautious in their planning and spending. Retirement findings particularly relevant to people with these approaches are included throughout the report

7 Priorities and feelings While priorities change at each stage of life, family security and financial security are the things people value most throughout life. Retiring from work is one of many priorities people have in their lives, and on the whole they feel positive about it.

8 Priorities and feelings Across generations, financial security and family security are the things people value most in life 68% financial security Q. Below is a list of things which people value in life. Which three do you value the most? (Base: Pre-retirees and retirees) 63% family security

9 Priorities and feelings Values in life Across generations, family security and financial security are among the things that people value most in life. Over two thirds (68%) say financial security is one of the things they value most in life, and over three in five (63%) say financial security is: Preretirees Retirees Financial security 67% 71% Family security 63% 63% Fun and enjoyment in life Warm relationships with others 34% 29% 28% 36% Self-fulfilment 25% 23% Sense of accomplishment 20% 15% Self-respect 17% 18% Being wellrespected 14% 20% Sense of belonging 14% 13% Nearly a third of women (32%) say warm relationships with others is one of the things they value most, compared to just over a quarter (27%) of men. Conversely, 28% of men say self-fulfilment is something they most value, compared to 22% of women. Some values differ by generation: 38% of people in their 30s rate fun and enjoyment in life as important, compared to 29% of people in their 50s 23% of people in their 30s value a sense of accomplishment, compared to 13% of people aged 60 or over Priorities in life Priorities differ by age, and while having good health (68%) and enough money for a comfortable life (52%) rank highly for everyone, these are more likely to be important in life for older generations: Good Enough Age health money % 47% 30s 57% 51% 40s 69% 52% 50s 82% 53% % 54%

10 Priorities and feelings Priorities in life differ by age Having good health Taking care of my family 51% 57% 69% 82% 76% 18% 42% 46% 38% 31% Having enough money for a comfortable life 27% 37% 33% 42% 35% 47% 51% 52% 53% 54% Being in control of my finances Having a successful career Age % 21% 15% 14% 10% Q. Which of these aspects, if any, are the most important in your life currently? You may select up to five responses (Base: Pre-retirees and retirees)

11 Priorities and feelings Most people feel positively about retirement and this increases the closer they get 62% 61% Retirement 51% 53% 55% 50% Q. Below are some words people have used to describe their feelings in retirement. To what extent does each of these apply/ do you think each of these will apply to you? A. Happy (Base: Pre-retirees and retirees) Years to retirement Retired

12 Priorities and feelings Happiness in retirement Pre-retirees are more likely to expect they will feel happy rather than anxious in retirement, and this sentiment is shared by retirees. This positivity increases in the lead up to retirement, with those nearest to retiring the most likely to say they will feel happy in retirement. Working age people who have not started saving for retirement or have not received any advice or information about it, are less likely to feel positive about their retirement: 53% of working age people who have received advice or information think they will feel happy in retirement, compared to 35% who have not. Working age people in their 60s or over are more likely to think they will feel happy in retirement. Over half (55%) think they will feel happy compared to 44% of those in their 40s. 55% of working age people who have started saving think they will feel happy in retirement, compared to 41% who have not.

13 Priorities and feelings People are more likely to associate positive emotions with retirement Happy 48% 50% Creative 27% 26% Cautious 41% 41% Lonely 26% 21% Calm 40% 46% Anxious 25% 24% Hopeful 37% 38% Wanted 21% 27% Optimistic 36% 40% Overwhelmed 21% 21% Excited 33% 31% Stressed 21% 20% Confident 33% 35% Isolated 20% 15% Motivated 33% 28% Frustrated 19% 15% Bored 28% 25% Confused 17% 10% Inspired 29% 26% Embarrassed 10% 9% Pre-retirees Retirees Q. Below are some words people have used to describe their feelings in retirement. To what extent does each of these apply / do you think each of these will apply to you? A. Applies (Base: Pre-retirees and retirees)

14 Finances in retirement Financial outgoings differ by age, as does the way pre-retirees plan for their retirement. Looking ahead, many people expect to make significant adjustments to their living arrangements in later life.

15 Finances in retirement People in their 30s and 40s are most likely to be financially supporting others and borrowing Financially supporting others Borrowing Age % 16% 44% 43% 40% 36% 69% 62% 78% 59% 63% 57% Q. What financial outgoings, if any, do you currently have? (Base: Preretirees and retirees)

16 Finances in retirement Financial outgoings in retirement While household bills and leisure and entertainment costs are always likely to be financial outgoings, other expenses including financially supporting others and borrowing vary more with age. People in their 30s and 40s are the most likely to be financially stretched. The majority of people in their 30s (69%) and 40s (78%) are financially supporting others, and are more likely to be borrowing (62% and 59% respectively). People aged 60 or over are less likely to be borrowing or financially supporting others, so have more flexibility to spend their money on other things: 12% of people age 60 or over count charitable donations as one of their financial outgoings, compared to 5% of people aged % of people age 60 or over identify general home and garden maintenance as an outgoing, compared to 16% of year olds. Retirees continue to face regular expenses once they stop work, including household bills (60%) and credit card repayments (22%). Fewer pre-retirees are expecting to face these financial outgoings. Less than half (48%) expect to be paying household bills, and just 12% expect to be repaying credit card bills in retirement.

17 Finances in retirement Pre-retirees expect fewer outgoings in retirement than current retirees have Borrowing 23% 29% General savings 47% 68% Financially supporting others 33% 34% Household/ personal living costs 73% 88% Leisure/ entertainment 55% 73% Pre-retirees predicted outgoings Retirees actual outgoings Q. What financial outgoings, if any, do you expect to have in your retirement (Base: Pre-retirees) Q. What financial outgoings, if any, do you currently have? (Base: Retirees)

18 Finances in retirement The ways retirees fund their retirement differs from preretirees expectations 60% 59% 40% 12% 11% 19% 11% Pre-retirees Retirees 5% Q. Which of the following are likely to help you fund / are currently helping you fund your retirement? (Base: Pre-retirees and retirees) Cash savings/ deposit accounts State pension/ social security My own income if I keep working to some extent Personal pension scheme

19 Finances in retirement Funding retirement There are many methods of funding retirement, and the expectations of pre-retirees differ from the reality experienced by retirees. Nearly three in five (59%) retirees use cash savings/deposit accounts to help them fund their retirement. Financial support from children (34%) is also a popular funding method for retirees, followed by: Life insurance/ endowment savings 34% plan Stocks and shares 33% Annuities 23% Fewer pre-retirees expect to have financial support from children (15%) or annuities (16%), than current retirees do. Instead, more pre-retirees expect to use their own income (40% compared to 19% of retirees), a Defined Contribution employer pension scheme (16% vs. 8%) and income from renting out a property (25% vs. 15%). Despite their intentions, 17% of preretirees who say they are likely to help fund their retirement with cash savings/ deposits are yet to start saving for their retirement. For the next generations of retirees, retirement funding methods are likely to be different.

20 Finances in retirement Retirees in Singapore are among the least likely be using state retirement funding 64% 62% 53% 53% 53% 51% 48% 45% 44% 37% 35% 30% 26% 25% 11% 9% 7% Q. Which of the following are currently helping you to fund your retirement? A. State pension/social security (Base: Retirees)

21 Finances in retirement Over one in five working age people expect to use property to fund their retirement 21% of pre-retirees believe that income from downsizing or selling a property is likely to help them fund their retirement Q. Which of the following are likely to help/are helping you fund your retirement? A. Income from downsizing or selling property (Base: Pre-retirees and retirees) Income from downsizing or selling a property is helping 11% of retirees to fund their retirement

22 Finances in retirement Using property to fund retirement More pre-retirees expect to use property to help them fund their retirement, than current retirees do. 21% of pre-retirees believe that income from downsizing or selling a primary or secondary property will help them to fund their retirement. In comparison, only 11% of retirees are using property downsizing or sale income to help them to fund their retirement. Pre-retirees in their 50s are more likely to think property will help fund their retirement (26%) than those aged between 25 to 29 (10%). Those closer to retirement are more likely to think property will help them fund their retirement: Age Downsizing/ selling property % 30s 19% 40s 22% 50s 26% % Those planning to use income from downsizing or selling property think they will feel happy in retirement. Nearly half (46%) of pre-retirees expecting to use income from a property think they will feel happy, compared to 55% of people who say a state pension will help them fund retirement and 49% who say their own income from continuing to work will.

23 Finances in retirement Pre-retirees in Singapore are among the most likely to think downsizing or selling property will help fund their retirement 26% 22% 21% 20% 17% 12% 14% 13% 9% 9% 9% 7% 6% 6% 6% 4% 4% Q. Which of the following are likely to help you fund your retirement? A Income from downsizing or selling primary or secondary property (Base: Pre-retirees)

24 Finances in retirement Many people don t expect to stay in the same home in their later years 32% Move into a care home 33% Move into a retirement home 34% Move to a bigger home Q. Looking ahead [to your 40s or beyond], when, if at all, do you expect to make the following changes to your living arrangements? (Base: Pre-retirees and retirees) 56% Move to a smaller home

25 Finances in retirement Future living arrangements Looking forward, working age people and retirees of all ages have plans to change their living arrangements in the future. These include moving to: A smaller home 56% Live closer to family members/children 39% A bigger home 34% A retirement home 33% 57% of people in their 50s plan to move to a smaller home in the future compared to 52% of people in their 60s and 24% of people 70 or over. Those who have received some sort of retirement advice are also more likely to think they will move to a smaller home (60%) than those who have received none (43%). People who are Concerned Realists are the most likely to think they will move to a smaller home (63%), while Assured Optimists are the most likely to think they will move to a bigger home (48%). A care home 32% Live with my children 30% Another country 27% Another city/ town in the same country 25%

26 Finances in retirement Over half of people in Singapore think they will move to a smaller home in the future 66% 59% 56% 56% 54% 48% 39% 39% 38% 35% 34% 27% 25% 23% 20% 17% 15% Q. Looking ahead [to your 40s or beyond], when, if at all, do you expect to make the following changes to your living arrangements? A. I will move to a smaller home (Base: Pre-retirees and retirees)

27 Preparing for the future Many working age people have not yet started saving for retirement or had any retirement advice. Among pre-retirees who have started, many have stopped or faced difficulties saving for retirement. Looking back, many wish they had started saving for retirement earlier.

28 Preparing for the future Nearly a quarter of pre-retirees have not started saving for their retirement Of those who have started, many have stopped or faced difficulties 23% of pre-retirees have not started saving for their retirement Q. At what age did you start saving for your retirement? A. I have not started (Base: Pre-retirees) Q. Have you at any point stopped and/or faced difficulties with saving for your retirement? A. Yes (Base: Pre-retirees who have started saving) 38% of those who started saving for retirement have either stopped or faced difficulties

29 Preparing for the future Saving for retirement Nearly a quarter (23%) of pre-retirees have not started saving for their retirement. While those closer to retirement are more likely to have started saving for retirement, 18% of people in their 50s and 10% of people aged 60 or over have still not started saving. While 73% of working age people have started saving for retirement, 38% of them have stopped or faced difficulties saving. Pre-retirees who are Assured Optimists are the most likely to have stopped and/ or faced difficulties with their retirement saving (42%), while pre-retirees that are Strategic Planners are the least likely (32%). Women are less likely to have started saving. Over a quarter (26%) of women have not started saving for their retirement, compared to 20% of men. 25% of pre-retirees who are Comfortably Affluent have not started saving for their retirement, compared to 20% of Strategic Planners.

30 Preparing for the future Over two in five pre-retirees in Singapore have either not started saving for retirement or stopped /faced difficulties 65% 54% 53% 52% 48% 48% 47% 46% 43% 42% 42% 41% 40% 39% 38% 37% 36% Q. At what age did you start saving for your retirement? A. I have not started (Base: Pre-retirees) Q. Have you at any point stopped and/or faced difficulties with saving for your retirement? A. Yes (Base: Pre-retirees who have started saving)

31 Preparing for the future Over a quarter of preretirees have never received advice or information about retirement Q. From which sources, if any, have you received any advice and/or information about retirement? A. I have never received advice or information about retirement (Base: Pre-retirees) 26% of working age people have never received advice and/or information about retirement

32 Preparing for the future Receiving advice Over a quarter (26%) of working age people have never received advice or information about retirement. While they may seek advice in future, some could be leaving it too late. Pre-retirees in their 50s are the most likely to have received no advice or information (30%), but even among those aged 60 or over, 25% have not. 33% of pre-retirees and retirees who are Committed Savers have received no advice about retirement, compared to 16% of Assured Optimists and 24% of Concerned Realists. Friends and family are the most common sources of retirement advice or information. Nearly half (49%) of pre-retirees and 56% of retirees have received advice/ information from them. 21% of preretirees and 34% of retirees only consulted them. Professionals including independent financial advisers, government agencies, insurance brokers/agents, solicitors, accountants, healthcare professionals and bank advisers are also popular sources of advice or information. Over two in five (41%) retirees and around a third (32%) of pre-retirees have received retirement advice/information from professionals. Read more

33 Preparing for the future Media, books and online sites also play a role. Around a third (32%) pre-retirees and over one in five retirees (22%) found advice or information about retirement from sources including online financial websites, blogs and discussion forums, books, magazines and direct marketing materials. 43% were prompted to get retirement advice or information because they thought it would be a good thing to do, and the same proportion (43%) because they wanted to be prepared and/or take control. A third (34%) were prompted by seeing what happened to their parents/other elderly people. Those who have received retirement advice and/or information say it: Gave them a more realistic view of the options available Gave them a better understanding of the financial implications of their choices Informed them of possibilities or options that they hadn't considered 49% 43% 41% 2% said there were no benefits.

34 Preparing for the future People get retirement advice and/ or information from many different sources Friends or Family Friends or Family only 21% 34% 49% 56% Professionals Professionals only 9% 6% 32% 41% Media, Books or Online Media, Books or Online only 5% 3% 22% 32% Pre-retirees Retirees Q: From which sources, if any, have you received any advice and/or information about retirement? (Base: Pre-retirees and retirees)

35 Preparing for the future Many retirees wish they had started saving earlier for retirement Looking back, 40% of retirees would have started saving for retirement at an earlier age Q. Thinking about your current retirement plans, what if anything would you have done differently? A. Started saving at an earlier age (Base: Retirees)

36 Preparing for the future Looking back Two in five (40%) retirees would have started saving for retirement at an earlier age, as would 41% of preretirees, given the opportunity to do something differently. People who are Committed Savers are the most likely to say they would have started saving earlier (47%), compared to 35% of Strategic Planners. Over two in five retirees (43%) and 35% of pre-retirees say they would have taken better care of themselves and their health.

37 Preparing for the future Looking back, pre-retirees and retirees would have done things differently in their retirement planning Started saving at an earlier age Taken better care of myself and my health Saved more by putting aside a larger share of my income Worried less Chosen high/ higher return investments Spent less on holidays/ cars Chosen low/ lower risk savings Obtained professional financial advice Pre-retirees Done something else Not done anything differently Retirees 2% 2% 19% 16% 17% 16% 15% 21% 13% 11% 12% 16% 16% 16% 41% 40% 35% 43% 33% 32% Q:Thinking about your current retirement plans, what if anything would you have done differently? (Base: Pre-retirees and retirees)

38 Preparing for the future Working age people expect to save for retirement for nine years longer than current retirees did Age 32 Age 39 Age 59 Age 61 Retirees 20 years Pre-retirees 9 year gap Q. At what age did you start saving for your retirement? (Base: Pre-retirees who have started saving and retirees who have saved) Q. At what age do you expect to stop paid work completely / did you retire? (Base: Pre-retirees who plan to retire and retirees) Age started saving for retirement 29 years Years saving for retirement Age retired/ expect to retire

39 Preparing for the future Retirement saving gap On average, pre-retirees expect to save for retirement for nine years longer than current retirees did, saving on average for 29 years, compared to retirees who saved for 20 years. The average age retirees started saving was 39 and they stopped working at 59. Pre-retirees who have begun saving started when they were aged 32 and expect to work until they are 61 years old. While working age men and women expect to save for a similar period (31 and 29 years respectively), retired men saved for longer (26 years) than retired women (15 years). On average, retired men started saving aged 37, while women waited until they were 41. Men retired when they were 63 years old, and women when they were 55 years old.

40 Practical steps Here are some important insights and practical actions drawn from the research findings, which may help today s retirement savers plan a better financial future for themselves Consider all your retirement expenses Start saving earlier for retirement Make sure your advice is professional Be prepared for financial ups and downs

41 Practical steps Here are some important insights and practical actions drawn from the research findings, which may help today s retirement savers plan a better financial future for themselves. 22% of retirees have credit card repayments as one of their outgoings, yet only 12% of pre-retirees expect to be repaying credit card bills in retirement When planning for retirement, make sure to list all your possible retirement outgoings 2 Start saving earlier for retirement 3 Make sure your advice is professional 4 Be prepared for financial ups and downs

42 Practical steps Here are some important insights and practical actions drawn from the research findings, which may help today s retirement savers plan a better financial future for themselves. 1 Consider all your retirement expenses 40% of retirees say they would have started saving for retirement at an earlier age, if they could have done anything differently Prepare for a longer Plan to start saving for and more build a bigger fund and active retirement retirement earlier, to help allow it to grow for longer 3 Make sure your advice is professional 4 Be prepared for financial ups and downs

43 Practical steps Here are some important insights and practical actions drawn from the research findings, which may help today s retirement savers plan a better financial future for themselves. 1 Consider all your retirement expenses 2 Start saving earlier for retirement 21% of pre-retirees and 34% of retirees who received retirement advice and/or information got it only from friends or family Aim towards a Seek healthier information from many sources, but make retirement sure the advice you get is professional 4 Be prepared for financial ups and downs

44 Practical steps Here are some important insights and practical actions drawn from the research findings, which may help today s retirement savers plan a better financial future for themselves. 1 Consider all your retirement expenses 2 Start saving earlier for retirement 3 Make sure your advice is professional 38% of pre-retirees who started saving for retirement have either stopped and/or faced difficulties saving Consider how When saving for retirement your gets difficult, make sure to review all your finances healthcare and seek alternative ways to help you continue needs towards a comfortable may retirement change in retirement

45 The research The Future of Retirement is a worldleading independent research study into global retirement trends, commissioned by HSBC. It provides authoritative insights into the key issues associated with ageing populations and increasing life expectancy around the world. This report, Generations and journeys, is the 13th in the series and represents the views of 18,207 people in 17 countries and territories. Since The Future of Retirement programme began in 2005, more than 159,000 people have been surveyed worldwide. Survey About HSBC Legal Copyright

46 The research The Future of Retirement is a worldleading independent research study into global retirement trends, commissioned by HSBC. It provides authoritative insights into the key issues associated with ageing populations and increasing life expectancy around the world. The findings are based on a nationally representative survey of people of working age (25+) and in retirement, in each country or territory. The research was conducted online by Ipsos MORI in September and October 2015, with additional face-to-face interviews in Egypt and the UAE. The 17 countries and territories are: Argentina Australia Brazil Canada China Egypt France Hong Kong India Indonesia Malaysia Mexico Singapore Taiwan United Arab Emirates United Kingdom United States This report, Generations and journeys, is the 13th in the series and represents the views of 18,207 people in 17 countries and territories. Since The Future of Retirement programme began in 2005, more than 159,000 people have been surveyed worldwide. This country report represents the views of 1,008 people in Singapore. All references to retirees refer to people who are semi or fully retired. All references to pre-retirees refer to working age people who have yet to fully or semi-retire. Global figures are the average of all countries and territories surveyed. All figures are global unless stated otherwise. Figures have been rounded to the nearest whole number. Survey

47 The research The Future of Retirement is a worldleading independent research study into global retirement trends, commissioned by HSBC. It provides authoritative insights into the key issues associated with ageing populations and increasing life expectancy around the world. This report, Generations and journeys, is the 13th in the series and represents the views of 18,207 people in 17 countries and territories. Since The Future of Retirement programme began in 2005, more than 159,000 people have been surveyed worldwide. HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,000 offices in 71 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,596bn at 31 March 2016, HSBC is one of the world s largest banking and financial services organisations. About HSBC

48 The research The Future of Retirement is a worldleading independent research study into global retirement trends, commissioned by HSBC. It provides authoritative insights into the key issues associated with ageing populations and increasing life expectancy around the world. This report, Generations and journeys, is the 13th in the series and represents the views of 18,207 people in 17 countries and territories. Since The Future of Retirement programme began in 2005, more than 159,000 people have been surveyed worldwide. Information and/or opinions provided within this report constitute research information only and do not constitute an offer to sell, or solicitation of an offer to buy any financial services and/or products, or any advice or recommendation with respect to such financial services and/or products. Legal

49 The research The Future of Retirement is a worldleading independent research study into global retirement trends, commissioned by HSBC. It provides authoritative insights into the key issues associated with ageing populations and increasing life expectancy around the world. This report, Generations and journeys, is the 13th in the series and represents the views of 18,207 people in 17 countries and territories. Since The Future of Retirement programme began in 2005, more than 159,000 people have been surveyed worldwide. HSBC Holdings plc 2016 All rights reserved. Excerpts from this report may be used or quoted, provided they are accompanied by the following attribution: Reproduced with permission from The Future of Retirement Generations and journeys, published in 2016 by HSBC Holdings plc. HSBC is a trademark of HSBC Holdings plc and all rights in and to HSBC vest in HSBC Holdings plc. Other than as provided above, you may not use or reproduce the HSBC trademark, logo or brand name. Published by HSBC Holdings plc, London > Retail Banking and Wealth Management HSBC Holdings plc 8 Canada Square, London E14 5HQ Copyright