According to a recent OCBC’s Financial Wellness Index survey, the majority of working adults in Singapore are financially unprepared for retirement (‘Most working adults not financially ready for retirement‘, 16 Jul).
The survey polled 2,000 working adults in Singapore between the ages of 21 to 65, asking about the state of their financial health.
In particular, half of those among the sandwiched generation – people who are supporting both ageing parents and their own children at the same time – struggle to cope, with significantly greater worries about their financial status.
The study also found that Singaporeans save an average of 26 per cent of their salary, with 82 per cent who proactively have insurance coverage. About a third do not invest and think of investing as a form of gambling, while almost half have no passive income. Passive income refers to income from rental, dividends, interest income, royalties, payout from annuities and so on.
Most are not well-prepared for retirement, the study said. Almost three-quarters are not on track with their retirement plans. Some 65 per cent said they are not accumulating enough funds to maintain their lifestyle after retirement.
In particular, the sandwiched generation was found to have more financial worries compared to the rest, with half of them finding it tough to support both their parents and children at the same time. Out of the half who find it difficult, some 63 per cent are concerned that they are not able to spend comfortably beyond the basics.
Interestingly, respondents’ ideal retirement age went up with age. Among those in the 20s age group, the average age that they want to retire is 56. In contrast, people who are 55 and older wish to retire at 67.
The government is looking to increase the age of retirement and re-employment age which is currently at 62 and 67 respectively in light of the increasing average life expectancy of the Singapore population.
Law allows parents to sue children for maintenance
In Singapore, the ruling government frowns upon having a state pension policy and expects everyone to pay for their ageing parents’ expenses.
In fact, they even enacted a law to allow parents to sue children for maintenance. Under the Maintenance of Parents Act (MPA), elderly parents can legally seek maintenance from their children if they are unable to provide for themselves. In an application for maintenance, parents can provide the names of all their children from whom they wish to claim maintenance.
Under the MPA, a Tribunal for the Maintenance of Parents (TMP) was set up by the government to provide aged parents a legal option to file a Maintenance Order against their children if necessary. In this way, the government can absolve itself from the responsibility of taking care of elderly Singaporeans in case they do not have enough savings to retire.
With the burden falling on children, it’s not surprising that half of sandwiched generation have found it tough supporting both the ageing parents and their own kids at the same time.
71-year-old cleaner: “I have to keep on working until the end of my life”
Then, there are many elderly who choose to continue to work so as not to burden their children, as they know their children are also struggling to make a living in the increasing expensive Singapore.
According to a Reuters’ report in Feb this year, an increasing number of elderly Singaporeans have resorted to making a return to the workforce at an age when many would like to retire comfortably.
Reuters reported that “the employment rate for people over 65 have jumped over 15 percent in the past decade. Some of them say they have to continue to work in order to survive”. It reported that almost a third of Singaporeans over 65 work.
Speaking to Reuters, 71-year-old cleaner Mary said that “the government’s retirement saving scheme doesn’t provide her with enough money”.
“I have to keep on working until the end of my life,” she lamented.
“What to do, no choice. I have to struggle for it.”