More Singaporeans invest, but worries persist over overspending, lack of retirement planning: OCBC survey

MORE Singaporeans are investing and on track with their investment goals, with fixed-income assets such as Treasury bills (T-bills) playing a big role, a survey by OCBC found.

According to the bank’s annual Financial Wellness Index released on Thursday (Nov 14), the number of respondents that invest increased by 9 percentage points to 88 per cent.

Among those that invested, the percentage of their income allocated to investments also rose by 10 percentage points to 26 per cent.

This comes as 2024’s Financial Wellness Index score rose by 1 point to 61 points, which OCBC noted is in tandem with economic growth.

But the study also uncovers some worrying trends, including poor retirement planning among those who are dual income, no kids (Dinks), and the tendency to overspend among young adults.

The annual survey of around 2,000 adults between the ages of 21 and 65 by OCBC is a review of Singaporeans’ financial wellness.

Some 43 per cent of respondents that invested were holding fixed-income securities and bonds, such as Singapore government bonds, T-bills and corporate bonds. This is up by 5 percentage points from last year.

Meanwhile, 33 per cent held Singapore stocks and 25 per cent hold unit trusts, down 3 percentage points each from last year.

The top three sources of their passive income were dividends from equity investments, interest income from fixed-income securities and rental income.

Overall, 44 per cent of those that invested said they were on track with their investment goals, up 4 percentage points on year, although the average rate of return from investments fell to 0.1 per cent in 2024, from 0.4 per cent in 2023.

Gen Zs, young millennials more likely to overspend 

The survey found that Singaporeans in their 20s – known as generation Zs and young millennials – are increasingly spending beyond their means to keep up with their peers.

Some 27 per cent of Singaporeans in this age group are doing so, up from 19 per cent in 2023.

This may be attributed to their tendency to “live in the moment”, OCBC said.

Some 41 per cent of those in their 20s said they make spontaneous purchases based on current desires and impulses, in areas such as concert tickets, plane tickets and online shopping.

Meanwhile, 41 per cent of credit card holders in this group also only pay the minimum sum on their credit card, as compared to the other age groups, where the figure is below 30 per cent.

Retirement planning

OCBC also found that Dinks – those who are married, engaged or in a serious relationship, and do not have children and do not support their partner financially – are less prepared for retirement than parents.

The Dinks fared worse than parents in indicators about retirement planning, having regular passive income, and ensuring that their dependents are financially taken care of for at least 12 months in the event of death.

There was also a lower proportion of Dinks that practise financial virtues.

The virtues include ensuring that their finances are passed on in the event of death; sticking closely to a budget; being aware of tax relief schemes, reviewing financial plans annually, and seeking professional advice.

These individuals may not feel the urgency or need to plan for the long term given their dual-income no-kids status, OCBC said.

Yet, Dinks still fared better than parents in 16 of 24 indicators, particularly in areas of debt and crisis management.

But Tan Siew Lee, OCBC’s head of group wealth management, noted that financial wellness constitutes more than the amount of money someone has.

Yvonne Chen, vice-president of group customer experience at OCBC added: “In a way, (Dinks) are better in some of the indicators, but because they are quite lacking in retirement planning, I wouldn’t consider that they are actually doing better.”

In the lender’s report, the average age of Dinks surveyed was 38, while the parents were on average 44 years old.

OCBC noted that retirement has consistently been one of the poorest performing indicators since the index was launched in 2019.

Some 54 per cent of respondents have started making financial plans for retirement, down 6 percentage points from last year.

Some 24 per cent said they either intend to start or started planning for their retirement in their 50s or later.

This is because they feel that they can just be “thrifty and save up”, “do not want to think too far ahead” or “still have time to start planning”, the survey found.

But more are choosing the most basic retirement lifestyle, especially among respondents who are in their 60s, which is up 21 percentage points on year to 63 per cent.

Nevertheless, 75 per cent of seniors in their 60s that chose the basic retirement lifestyle still underestimate the amount they need for retirement.

Among Dinks, 85 per cent of respondents without a retirement plan also underestimated the amount needed for retirement. This figure is 80 per cent for parents.

Tan said Singaporeans are likely underestimating the effects of inflation. “If you are not actively planning for retirement, you wouldn’t be on the lookout for price tags,” she said.

Chen added that Singaporeans are strong savers, which may lead to the misconception that savings alone is enough for retirement.

“If you’re just saving, flat without any interest that beats the inflation, then you are not really actively planning for your retirement,” she said.