Wealth Manager St. James’s Place Asia has released a new study, "Never Too Late to Plan: Preparing for the Golden Years." The report looks at the financial hurdles faced by those aged between 45 and 64 years who are in the later stages of their lives and careers.

This week, St. James's Place Asia launched a study which finds that 58 per cent of Singaporeans and Hongkongers aged between 45 and 64 have not planned for their retirement, and 64 per cent have not accounted for inflation in their financial planning.

The report coincides with the retirement age in Singapore having been raised from 62 to 63, as of July 2022, with plans to gradually raise it to 65 by 2030. Hong Kong, on the other hand, has an official retirement age of 65 years.

Increasing concern about retirement plans
The study finds that 66 per cent of Singaporeans and Hongkongers in this age range say that the fallout from Covid-19 has made them more concerned about planning for their retirement. As a result, over two thirds are worried about their ability to cover healthcare costs in their retirement, with 64 per cent expressing concerns about being a financial burden to their families, the wealth manager said.

“It is concerning that high levels of unpreparedness around retirement planning still persist, especially in the face of increasing economic volatility and skyrocketing inflation,” Oliver Wickham, CEO, SJP Hong Kong, said. “With people spending longer periods in retirement in the future, having a sound financial plan should be priority as it can go a long way towards easing some of the associated stress and anxiety while achieving a more comfortable retirement,” he added.

Wealth transfer putting pressure on family relationships
The study also finds a high level of uncertainty regarding wealth transfer. Sixty-four per cent of Singaporeans and Hongkongers in this age group say they are unsure how to manage intergenerational wealth transfer effectively, and 65 per cent do not understand the tax implications they might face.

As a result, 57 per cent say that wealth transfer and succession planning is a source of stress in their life, and 50 per cent say that it is causing disharmony among their family members, the study reveals.

A low level of action is also seen, with 60 per cent saying they do not have a will, although a far higher number have life insurance. Close to half have not made any plans to transfer their wealth or assets to family members, but 44 per cent of these people say that they plan to do this within the next five to 10 years, the wealth manager added.

A strong trend is also seen in donating wealth to philanthropic causes, the study shows, with 42 per cent planning to do this. While 84 per cent say that their family members are aware of these wishes, having a will in place can ensure that the distribution of assets is managed according to the person’s wishes while minimising the possibility of disputes arising amongst family members, the wealth manager said.

“Wealth transfer and succession planning unfortunately comes with many potential planning and emotional pitfalls that one must be carefully prepared for. While having wealth transfer conversations with loved ones can be challenging, it is an important first step towards ensuring peace of mind and avoiding major issues,” Gary Harvey, CEO, SJP Singapore, stressed.

“The high number of Singaporeans over 45 who still do not have a will is deeply concerning and may be due to people wanting to avoid tough conversations or delaying thinking about the inevitable. Seeking professional, third-party financial advice can help alleviate this stress and provide clarity and assurance to all involved that their commitments and wishes can and will be met," he added.

Despite the uncertainties and lack of preparedness in retirement and wealth planning, most Singaporeans and Hongkongers approaching retirement welcomed professional financial advice, with 76 per cent saying they have sought this out before making major financial decisions, the study shows.

“It is heartening to see that so many Singaporeans over 45 are receptive to financial advice as they approach retirement, which is notably higher than for other age groups,” Harvey stressed.

The findings in this survey were analysed and established through a total of 2,780 interviews conducted online in February and March 2022 in Hong Kong (1,360) and Singapore (1,420), the wealth manager said. Only respondents between the ages of 25 and 64, who held personal investments in stocks, property, shares, funds, etc. were interviewed. All respondents were from households with a minimum annual income of S$70,000 ($51,000) to over S$250,000.