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Singaporeans’ common retirement mistakes

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Singaporeans have a “mismatch with reality” when it comes to planning for retirement and the actualities of finishing their working life.

Their three major misjudgments include the actual duration of their retirement, their cost of living during retirement, and their ability to work during retirement.

According to the Manulife Investor Sentiment Index Survey, Singaporean investors expect to retire at 61 years of age, and then continue to work for up to nine more years – well above the regional average of six years – to 70-years-old.

But in contrast to these expectations about working past retirement, the number of those aged 65 and above were found to be shrinking, not growing.

“Research reveals that elderly labor employment levels are generally well below the level the survey findings point to,” Michael Dommermuth, president of international asset management at Manulife Asset Management, said.

“This could be because although retirees want to work, they may be increasingly selective about the jobs they take, waiting to find a position that is line with their personal interests, offers a flexible schedule and is less physically demanding,” he said, adding another reason could be their limited ability to work as a result of health issues.

The report highlighted these findings remain all the more disturbing considering the disparity between expected retirement expenditure and actual trends.

Emphasising the fact that in Singapore, for instance, healthcare costs are now four times higher than they were in the past 10 years, the survey concluded while Asian investors’ expected retirement expenditures were 64% of current income, “in reality they will likely be much higher”.

However, there may be a silver lining after all as Asian investors were found to be “better off in terms of wealth relative to current income” than their North American counterparts.

“But they don’t deploy their wealth as well as the Americans – an example being Asians’ habit of hoarding excessive amounts of cash, which loses value, instead of investing it. With attention and planning, Asian investors can improve their retirement outlook in a relatively painless way,” Donna Cotter, head of Asia wealth management, said.

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