Up to 80% Misjudge by 31%, Despite Financial Health Progress
The OCBC Financial Wellness Index released on Tuesday (Nov 2) highlights that while Singaporeans are enhancing their daily financial management with digital tools, a significant 8 in 10 are underestimating their retirement needs by 31%. Despite this, there’s a slight uptick in prudent retirement planning, with 40% of Singaporeans now opting for a more conservative lifestyle, estimating a need for S$2,300 monthly in retirement, up from 36% last year.
The survey shows progress in retirement planning, with 66% of respondents having made plans this year, an increase from 63% in 2020. However, less than half of these individuals feel they are on track to meet their retirement goals, indicating a need for professional advice as suggested by Tan Siew Lee, head of wealth management at OCBC Singapore, who emphasizes the importance of understanding inflation’s impact.
Financial Resilience Amidst Economic Recovery
The economic repercussions of the Covid-19 have not deterred Singaporeans from improving their financial health. Confidence in weathering financial crises has slightly increased, with 53% believing they can amass enough savings compared to 51% in 2020. Additionally, 54% feel they can sustain themselves for six months without employment, up from 52%.
Debt management has also seen improvements, with fewer people holding unsecured debts and more successfully managing housing loans. This year’s Financial Wellness score rose to 62 out of 100 from last year’s 61, evaluated across 24 indicators like regular saving, debt management, and investing.
Digital Tools Enhancing Financial Management
Digital banking and money management tools significantly boost financial health, with users scoring 65 in the index compared to 59 for non-users. These tools aid in regular saving (94% vs. 87%) and help investors meet their targets (58% vs. 49%).
Investment Trends Among Millennials
Younger millennials, particularly those in their 20s, have shown increased investment activity, with 86% investing this year compared to 64% in 2020. They are more inclined towards diverse investments like foreign stocks and cryptocurrencies but less likely to seek professional advice, often turning to online sources or peers. This demographic shows the lowest performance in their investments when not complemented by professional guidance, with only about half on track compared to 64% of those using both digital tools and professional advice.
Tan Siew Lee advises that while digital tools are beneficial, professional advice is crucial for effective portfolio management, especially for those unsure about investment strategies.
The OCBC Financial Wellness Index survey involved 2,051 working adults aged between 21 and 65, reflecting broader trends in financial behavior and preparedness in Singapore.
