A research report by UOB has put things in perspective for us. In 2018, the proportion of Singaporeans aged 65 and above will coincide with those aged 15 and below for the first time in the history of modern Singapore. By 2030, there will be a significantly higher percentage of seniors compared to juniors.
What does this mean for the financial planning industry?
1. The concept of retirement will drastically see a change. People will start to retire later, or perhaps even work through their retirement. The recent survey conducted by BTO shows that 1 in 3 Singaporeans feel they would have to work through retirement. The older generation will tend to depend on the younger one for financial support – especially for healthcare, living expenses etc.
2. Financial planning is more than necessary for the younger generation today. With the increasing number of elderly, and not enough young for these seniors, it shows a developing risk that Singaporeans will depend on their children for retirement. This trend, possibly shows that there are elements of a retirement crisis in the brewing, and will require very good planning of those 18 to 35-year-old workers to manage their own finances as well as support their seniors.
3. Financial advisers will have to embrace the idea of rewirement. The concept of retirement does not only change for the older generation but even so for the younger one. Retirement will scarcely resemble the conventional image of lazy days spent on cruise ships and golf courses. The increase in life expectancy will have an effect on the traditional life cycle of education, work and retirement. It will be replaced by a less linear cycle including a combination of career shifts, part-time jobs, entrepreneurial endeavours, continuing education and travel adventures.
Advisers should attempt to reach out to their potential clients with an aim to educate, and that with this improved financial literacy, the client will be empowered to have confidence in making their own informed personal financial decisions with the adviser according to their priorities and needs.