Singlife Financial Freedom Index 2024: It could now take Singapore consumers 30 years to attain financial freedom

More consumers this year see the importance of financial freedom; Survey respondents believe they need around S$612,045 to feel financially free, needing 30 years based on median yearly savings

SINGAPORE, 26 August 2024 – The second edition of Singlife’s Financial Freedom Index reveals that it may take consumers some 30 years to achieve financial freedom, up by nearly three years, compared with a year ago. On top of that, 4 out of 10 (44%) Singapore consumers surveyed believe they will never achieve financial freedom. Significant roadblocks cited include insufficient income (53%), unforeseen expenses (38%), job insecurity (32%), and debt repayment burdens (28%).

2024’s survey shows a dip in sentiments towards attaining financial freedom, with an average score of 58 out of 100, down from 60 in 2023. Respondents believe they need approximately S$612,045 to be considered financially free, up 8% from S$566,640 in 2023. With lowered median yearly savings of S$20,195 (around S$1,682 monthly), it could now take about 30 years to accumulate enough savings to feel financially free, compared with about 27 years previously. This could be due to inflation and cost-of-living concerns affecting consumer sentiments.

Although the path to financial freedom appears longer and more daunting compared to a year ago, the latest survey offers a silver lining: 55% of respondents this year say they know how to achieve financial freedom, up from 49% last year.

Debra Soon, Singlife Group Head of Brand, Communications, Marketing and Experience, said: “This year’s Financial Freedom Index shows that consumers feel an increasing difficulty in achieving financial freedom. We added more questions in the study and obtained more insights on how much consumers are saving, versus their goals, and what gaps they have in their finances. Perception studies are important in helping us understand how to help Singaporeans find a better way to financial freedom. By understanding the challenges they have to overcome to become financially free, we believe that we can help them plan and take meaningful steps to reach their financial freedom dream, whatever it may be.”

This year’s survey was conducted between April and June among 3,000 Singaporeans and Permanent Residents (PRs) aged 18 to 65. Those in the 35- to 44-year-old age group find it most difficult to attain financial freedom.

The survey also uncovers fresh insights into how Singaporeans and PRs approach critical life stages such as family planning and retirement, revealing the financial considerations and challenges that shape their choices.

Retirement Goals and Gaps

Four in five consumers aim to retire by 65, slightly above Singapore’s legislated retirement age of 63. Consumers expect they would need a median of S$2,856 per month for daily living expenses in retirement. The stark contrast between median monthly savings (S$1,682) and median retirement expenses underscores the need for individuals to begin building up cash reserves in order to retire comfortably.

Nearly 80% of consumers intend to retire in Singapore. A small percentage of consumers cite lower cost of living (71%), slower pace of lifestyle (63%), and a more favourable climate (35%) as their motivations for wanting to retire overseas. Most in this minority group favour locations such as Malaysia, Australia, New Zealand, and Thailand.

Long-term Financial Impact of Parenthood

Half of consumers estimate more than S$500,000 is required to raise a child in Singapore from birth to 21 years of age, based on a median monthly expense of S$1,918.

Over 40% believe having a child will delay their retirement age and ability to achieve financial freedom by an average of 14 to 15 years. Consequently, 54% of consumers without children say they do not intend to have any, and 80% of those already with at least one child say they do not intend to have more.

The Financial Freedom Index was designed with the aim of understanding the attitudes of individuals from diverse income levels and age groups towards achieving financial freedom amidst inflation and the changes to the cost of living.

Protection Gap and Preparedness for Unexpected Events

Although most consumers have on average three types of insurance products, only 57% of respondents are aware of or claim to have life insurance coverage. Even fewer (38%) indicate that they have coverage for critical illness.

According to industry guidelines, consumers are recommended to have life insurance coverage of at least nine times of one’s annual income^[1]. Yet, the median coverage among the respondents, at S$286,670, is less than half of the adequate level of coverage.

Based on the S$4,922 median monthly personal income in the survey, the amount of critical illness coverage respondents have is S$207,238 – 12% less than the recommended coverage of four times of one’s annual income^[2].

While most consumers (78%) have at least three months of emergency funds, only 1 in 3 perceive that they have adequate savings or emergency funds to cushion unexpected events.

For more insights into consumers’ perception of financial freedom from the Singlife Financial Freedom Index 2024, please visit singlife.com/ffi.

[1] https://www.lia.org.sg/tools-and-resources/faq/mortality-protection
[2] https://www.lia.org.sg/media/2272/be-in-the-know-about-critical-illness-plans.pdf