Singapore consumers may now need 30 years to achieve financial freedom: Singlife

Four in ten consumers surveyed in Singapore believe they will never achieve financial freedom.

According to Singlife's Financial Freedom Index 2024, it may take three decades for Singapore consumers to achieve financial freedom, almost three years longer than a year ago.

Participants in the second edition of the index believe they need about $612,045 to be considered financially free, an 8% increase from $566,640 in 2023.

With average annual savings down to US$20,195 (about S$1,682 a month), it could now take about 30 years to save enough to feel financially independent, down from about 27 years previously. This could be because inflation and concerns about the cost of living are affecting consumer sentiment, the survey said.

Due to declining sentiment toward achieving financial freedom, the average rating drops from 60 last year to 58 out of 100.

The survey also shows that four in 10 Singapore consumers surveyed believe they will never achieve financial freedom, with key barriers cited as insufficient income (53%), unforeseen expenses (38%), job insecurity (32%) and the burden of debt repayment (28%).

Although the road to financial freedom seems longer and more daunting than last year, the latest survey offers a ray of hope: 55% of respondents this year say they know how to achieve financial freedom, up from just 49% last year.

In terms of retirement goals, four in five consumers plan to retire at 65, slightly above Singapore's statutory retirement age of 63. Consumers expect to need an average of $2,856 per month for daily living expenses in retirement.

Singlife points out the stark contrast between average monthly savings ($1,682) and average spending in retirement, highlighting the need for individuals to start building cash reserves to enjoy a comfortable retirement.

When it comes to parenting, half of respondents estimate that raising a child from birth to age 21 in Singapore costs more than $500,000, with average monthly expenditure of $1,918.

Over 40% believe that having a child will delay their retirement age and ability to become financially independent by an average of 14 to 15 years. As a result, 54% of consumers without children say they do not plan to have children, and 80% of those who already have at least one child say they do not plan to have any more children.

Although most consumers own three types of insurance products on average, only 57% of them know they have life insurance or report having it. Even fewer (38%) report having critical illness insurance.

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Industry guidelines recommend that consumers purchase life insurance with coverage equal to at least nine times annual income, but the median coverage level among respondents was $286,670, less than half the appropriate coverage level, the study shows.

Based on the survey's average monthly personal income of $4,922, respondents' critical illness coverage is $207,238—12% less than the recommended coverage of four times annual income.

While most consumers (78%) have an emergency fund for at least three months, only one in three believe they have sufficient savings or emergency funds to cushion unexpected events.

Singlife's Financial Freedom Index 2024 survey was conducted between April and June among 3,000 Singaporeans and permanent residents aged 18 to 65.

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