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Younger Singaporeans in their 20s and 30s, on average, aspire to retire at the age of 58, a whole decade before the official re-employment age of 68.

This is according to OCBC Bank's (OCBC) Financial Wellness Index, where they surveyed 2,182 working adults, aged 21 to 65, to measure the state of Singapore's financial wellness.

The survey was conducted in Aug. 2022. It is a study comprising 10 financial wellness pillars and 24 indicators to understand Singaporeans' state of financial health.

The desire to retire earlier & in luxury among younger Singaporeans

In addition to retiring earlier, younger Singaporeans wish to retire in luxury. When offered three different retirement lifestyles, 34 per cent of Gen Z and 28 per cent of Millennials picked the most luxurious retirement lifestyle where they aspire to own private properties and jet off to European countries at least twice a year.

This lifestyle comes at a cost, Gen Z and Millennials are concerned about whether these retirement goals are attainable with less time between retirement and now. Moreover, a majority of them, 62 per cent of those in their 20s and 56 per cent of those in their 30s, worry that they will not have enough funds to retire.

To fund the retirement lifestyle they want, younger Singaporeans are emboldened to accumulate their wealth fast. As such, they often view investments as easy money, making them take more risks to shorten their journey to retirement. One such popular investment is cryptocurrency.

"In their hurry to grow their retirement funds, however, some may be tempted to speculate for quick gains," said OCBC's Head of Wealth Management Tan Siew Lee.

An interest in cryptocurrencies

Despite the current rocky climate surrounding cryptocurrency, many Gen Z and Millennials are still keen to invest in cryptocurrencies within the next 12 months. 18 per cent of Singaporeans in their 20s have invested in cryptocurrencies, and 14 per cent of Singaporeans in their 30s are currently invested in cryptocurrencies.

This penchant for investing in riskier assets such as cryptocurrency has hit young Singaporeans hard, as 42 per cent of investors in their 20s made an overall loss on their investments.

On average, Singaporean investors in their 20s and 30s who made losses saw a loss of 40 per cent from their cryptocurrency investors.

Speaking to the media, Aaron Chwee, OCBC's Head of Wealth Advisory, warns younger Singaporeans that having a very concentrated portfolio may be their pitfall, and this will push them further away from financial wellness.

When asked if the recent collapses of certain cryptocurrencies will have an impact on the world, Chwee said that is is not a mainstream form of investment, it is still hard to tell what will happen, and it remains to be seen how cryptocurrency will impact the economy.

Overall Financial Wellness Index dipped to 61

With an uneven post-pandemic recovery, record high inflation, soaring interest rates and geopolitical and market uncertainty, the current economic climate has hit Singaporeans' financial wellness.

This decline comes with poorer investment returns, increased debt stress and derailed retirement plans.

Instead of tightening their belts, Singaporeans still prioritise spending for pleasure.

While Singaporeans continue to be strong savers, the post-pandemic recovery encourages "revenge travel and spending". As a result, more are allocating their savings to pleasures like travel rather than investments, retirement or emergency funds.

In addition, more Singaporeans are adopting undesirable financial habits such as gambling more than they can afford to lose, paying only the minimum on their credit cards and spending beyond their means. According to survey results, this leaves Singaporeans ill-equipped to face a financial crisis as less than half of Singaporeans (45 per cent) can meet their families' needs for the next year, and only 53 per cent have accumulated six months' worth of salary set aside as emergency fund.

Important things Singaporeans should do to be financially healthy

Chwee offers some tips so that Singaporeans can ensure their financial wellness:

1. Save for a rainy day

Singaporeans should have at least six months of their monthly expenditure set aside in case of an emergency or a crisis. This does not mean you cannot treat yourself once in a while. Instead, you are encouraged to spend within your means and not take on more debt than is necessary, especially given the high-interest rates.

2. Make informed investment decisions.

Adopting a well-diverse portfolio can help in the long run as it will help maximise your returns in the long run. However, do not speculate excessively and do your research before making investments. If in doubt, do not hesitate to seek help from financial institutions and get professional advice.

3. Get adequate insurance coverage

An emergency fund is not enough; ensure your insurance coverage is up to date and can cover you financially in case of any unexpected events.

Tan added:

"Young Singaporeans need to look longer term, seek professional advice, and always do their research before investing. Three important things all Singaporeans can keep in mind are these: Save diligently, invest prudently, and have adequate insurance. If they do this, and if they persist with good financial habits, they can emerge stronger in time to come.”

Top photo from Canva