Singaporean parents spend 2.5 times more on their children’s needs than their own retirement planning, a study by AIA Singapore revealed.
The study found that on average, parents spend around 20% of their income on their children, but less than 7% on their own retirement. Seven in 10 (70%) also said that they plan to either maintain or increase the amount of income allocated to their children’s expenses.
These findings were sourced from two surveys conducted by AIA in January and June with over 1,000 Singaporean respondents. The insurer also found that a lack of financial understanding has led to the over-reliance on bank savings. For 92% of Singaporeans, bank deposits are the most popular savings instruments.
Savings priorities also tend to be more short term – focusing on family needs and emergency spending instead of longer term goals like retirement. Emergency spending was the top priority (64%), followed by ensuring financial security for the family (56%). Among young families with kids, 76% intend to leave an inheritance for their children, but only half have started planning for it.
Furthermore, many Singaporeans are underestimating the amount needed to maintain their desired retirement lifestyle. With a life expectancy of 84.8 years, an average Singaporean will live almost 25 years more after retiring at age 60. The study found that 66% underestimate the actual retirement amount needed by SG$967 per month. Among families with children, the underestimated amount is slightly higher at SG$1,020 per month.
“Retirement planning is an essential part of securing our longer term financial security, not just for parents, but for the entire family, so everyone can look forward to a brighter future with peace of mind,” said Melita Teo, chief customer and digital officer of AIA Singapore.
“We recognise this is not an easy balancing act, especially amid growing financial insecurity as a result of COVID-19. Many also fear becoming a burden on their children later on in life. As part of AIA’s brand promise of enabling Singaporeans to live healthier, longer, better lives, we want to help people better manage their financial priorities when preparing for their golden years. We are committed to continuously innovating our suite of customisable solutions with the goal of ensuring that a golden retirement is within reach for Singaporeans, no matter the circumstances.”
