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Survey reveals that youth in Singapore are pessimistic about their financial future

11 Sep 2014

Survey reveals that youth in Singapore are pessimistic about their financial future

  • Nine out of 10 youth in Singapore feel financially unready about their future;
  • Retirement estimates fall drastically short of what youth think they need;
  • NTUC Income aims to get youth to start financial planning early through a new campaign which includes an inaugural $100K Challenge for one lucky winner to pursue his/her dreams for the future

SINGAPORE, 11 SEPTEMBER 2014 – A recent survey conducted by Nielsen of youth between the ages of 18 to 29 has revealed that young adults in Singapore are overwhelmingly pessimistic about their financial situation and retirement needs.

Eight out of 10 are not confident about their current financial situation, while nine out of 10 feel they are not financially ready for the future.

The survey, which was commissioned by NTUC Income, covered more than 1,000 final-year polytechnic students, university undergraduates and those who have just started working. It revealed that, while youth in Singapore have some financial literacy skills, they need guidance to understand what constitutes proper financial planning better.

Ms Deniece Oei, NTUC Income’s Financial Associate, said that local young adults – while appearing to be more financially savvy in recent years – still fall short when it comes to thinking about their retirement needs.

“They need to be much more disciplined to reach their retirement goals – especially if they want to retire early. My general advice to all young adults is to bite the bullet and invest in insurance as early as possible. If they secure a sound personalised plan that sets them on the right path towards retirement, they will thank themselves as they grow older because the journey to retirement is a long and unexpected one.”

One encouraging finding showed that nearly all of those surveyed (nine out of 10) indicated that they regularly put money aside as savings – with seven out of 10 owning at least one insurance policy.

Despite this, however, eight out of 10 believe that they need at least three months of their income for emergency, which is a sizeable gap from the 10 months that financial planners recommend.

The average figure of $1,005,890 was cited as the perceived amount needed for retirement. The average age for retirement is estimated at 57 and the number of years they expect to live while in retirement is 23. Yet the mean projected savings by retirement age is only $382,872 – a shortfall of more than $675,000 and only a third of what they think they need.
Compounding the problem, seven out of 10 say they have not taken inflation into account when predicting what they need for retirement.

More than 40 per cent of those surveyed said they have not taken any action on financial planning even though about a quarter (23 per cent) stated that their main motivation for starting financial planning early is to be free of debt. Fourteen per cent indicated they want to have sufficient funds during their retirement.

The top sources for advice on financial planning are family and relatives (57 per cent), friends and colleagues (44 per cent), and insurance agents and financial planners (34 per cent).

About half of the respondents said the main barrier to financial planning is they need to save more before they can start investing and planning for the future. Twenty five per cent indicated that they do not know where or how to start.

“The survey shed some interesting light on youth in Singapore when it comes to financial planning,” said Mr Luca Griseri, Nielsen’s Head of Financial Services (Singapore & Malaysia). “It is encouraging to note that more than half have reviewed their financial status, created financial plans, set aside money for their financial needs and make adjustments to their financial plans. This reflects their prudence and demonstrates that they possess some knowledge of financial planning.

“However, there is still plenty of room for education in terms of what they can do to ensure that they are financially ready for emergencies and in their retirement years.”

Mr Marcus Chew, Vice President for Strategic Marketing at NTUC Income, said the survey is aimed at identifying the gaps in financial planning knowledge and action among youth in Singapore.

“We would like to get them thinking about financial planning early and to help them understand that the decisions they make today will have an impact on their financial well being later in life.”

To this end, NTUC Income has already been conducting a financial literacy programme from May 2014 which has benefitted 9,815 students from over 30 secondary schools to date. Called Cents and Sensibility, the NTUC Income financial literacy programme, presented by Act 3 International, introduces concepts of financial literacy to students and aims to get them thinking about financial planning early.

Mr Chew explained, “Youth in Singapore aspire to be financially independent. By taking action through proper financial planning and responsible spending while still young, they have a better shot at achieving such independence at an earlier point of their lives.”