More than two in five Singaporeans believe they will never achieve financial freedom, survey reveals

A recent survey by Singlife has revealed that more than two in five people in Singapore believe they will never achieve financial freedom based on their current financial trajectory.

The poll, part of Singlife's second Financial Freedom Index, shows significant concerns among Singaporeans and permanent residents regarding their financial futures.

According to the survey, 44 per cent of respondents expressed doubts about ever reaching financial freedom, citing major roadblocks such as insufficient income (53 per cent), unforeseen expenses (38 per cent), job insecurity (32 per cent), and debt repayment burdens (28 per cent). These challenges have contributed to a decline in the overall Financial Freedom Index score, which dropped to 58 out of 100 in 2024, down from 60 in 2023.

The survey, conducted between April and June 2024 among 3,000 Singaporeans and permanent residents aged 18 to 65, also found that respondents believe they need approximately S$612,045 to feel financially free, an increase of 8 per cent from S$566,640 in 2023.

However, with the median yearly savings reduced to S$20,195, it may take individuals around 30 years to achieve this goal, up from 27 years in the previous year. This extended timeline reflects the impact of inflation and rising costs of living on consumer sentiment.

Despite these challenges, there is a slight increase in the number of respondents who believe they know how to achieve financial freedom, rising from 49 per cent in 2023 to 55 per cent in 2024. However, the survey also highlighted significant gaps in financial preparedness, particularly among the 35- to 44-year-old age group, who find it most difficult to attain financial freedom.

Retirement Goals and Financial Preparedness

The survey revealed that four in five respondents aim to retire by age 65, slightly above Singapore’s legislated retirement age of 63. To do so comfortably, they estimate needing a median of S$2,856 per month for living expenses. However, with current median monthly savings of $1,682, there is a significant gap between savings and expected retirement needs, underscoring the importance of building up cash reserves early.

Interestingly, nearly 80 per cent of respondents plan to retire in Singapore, while a minority prefer to retire overseas due to factors such as lower costs of living (71 per cent), a slower pace of life (63 per cent), and more favorable weather (35 per cent). Top retirement destinations include Malaysia, Australia, New Zealand, and Thailand.

The Financial Impact of Parenthood

The survey also explored the long-term financial impact of parenthood, with half of the respondents estimating that more than S$500,000 is required to raise a child in Singapore from birth to age 21, based on a median monthly expense of S$1,918.

Over 40 per cent believe that having children will delay their retirement age and ability to achieve financial freedom by an average of 14 to 15 years. As a result, 54 per cent of respondents without children said they do not intend to have any, and 80 per cent of those with at least one child do not plan to have more.

Protection Gaps and Preparedness for Unexpected Events

The survey also revealed that while most consumers have on average three types of insurance products, only 57 per cent are aware of or claim to have life insurance coverage, and just 38 per cent have critical illness protection.

These figures suggest a significant protection gap, particularly when considering industry guidelines that recommend life insurance coverage of at least nine times one’s annual income. However, the median coverage among respondents was only S$286,670, less than half the recommended level.

Moreover, while most respondents (78 per cent) reported having at least three months of emergency funds, only one in three felt they had adequate savings to cushion against unexpected events. This finding highlights the need for better financial planning and risk management among Singaporeans to secure their financial future.

Singlife's Group Head of Brand, Communications, Marketing and Experience, Debra Soon, emphasized the importance of understanding these challenges to help Singaporeans take meaningful steps toward achieving their financial freedom dreams. As Singaporeans navigate the complexities of financial planning amid rising costs, the insights from this survey provide valuable guidance for both individuals and financial planners.