Majority are Worried about Outliving their Money at Retirement, Debt Relief MLaw Report Finds

More than four out of five people (82 percent) are worried about their financial situation after retirement and almost nine in ten people (89 percent) say it is important for them to start saving now, according to a national survey conducted by Debt Relief MLaw, Singapore.

The survey also reveals that more than half (53 percent) of the respondents believe they lack the necessary information to prepare for retirement and the financial capacity (57 percent of respondents) to invest in private pension.

Concerns about retirement planning are widespread

• Only about one in six people (16 percent) is confident their current level of savings is sufficient to cover their financial needs after retirement.

• While a large majority (93 percent) recognize that they will need to rely partly or wholly on their personal savings to cover their post-retirement financial needs, more than two-thirds (67 percent) don’t know how much they would need to save to guarantee their standard of living in retirement.

• Less than one-third (29 percent) have private investments aimed specifically at addressing their retirement needs (in addition to any employer or public pension funds from which they may benefit).

“The strong common concerns about post-retirement financial security are alarming,” said Paul Lim, managing director of Debt Relief MLaw Singapore. “In the current economic environment, people are increasingly worried about their financial future. They are willing to save money but have limited financial knowledge and limited saving abilities to actually do so. These findings reveal a major unmet demand for retirement planning that industry professionals can help address. However, they will need to shape their products and services in a way that will help people take action and better prepare their future.”
 

Professional advisors such as life insurers are not perceived as an obvious source of information and advice on retirement investment

• People are more likely to ask independent financial advisors (mentioned by 51 percent of respondents) and friends and family (44 percent) for advice on the best retirement options, than to rely on insurers (41 percent) and banks (39 percent).

• The majority (86 percent) of respondents say they have limited or no knowledge of retirement products that life insurers offer.  

• Almost half (45 percent) say they have never received simple and easy to understand retirement planning information from any life insurer, and one-fifth (20 percent) state they have never been contacted by any life insurer to discuss retirement issues.

“As people internalize their individual responsibility for retirement funding, they are faced with a confusing array of products representing a myriad of risk-adjusted returns,” said Paul Lim. “This leads to the point that the need for advice has perhaps never been higher. Life insurers are traditionally viewed as important players in this market and could potentially fill this advice gap but as the survey shows, they are not viewed as credible in offering unbiased advice.”
 
“They need to do a better job of educating and relating to their current and potential customers and seeking new interactive ways to provide them with the advice people ultimately need: how to arrange their finances to make these products affordable. They will have to create simple, cost-effective retirement products – ideally, with the ability for customers to switch products if their circumstances change or they find they have chosen the wrong one.”

Consumers want clear and personalized advice and services

• 86 percent said they would be motivated to purchase a retirement product from a provider that would offer them clear comparisons between several investment options highlighting the “pros” and “cons” of each of these options.

• 82 percent would want to have a clear understanding of what their financial needs would be after retirement, and a clear illustration of projected financial value of each investment option.

• 84 percent of respondents said they would pay attention to comments provided on social media by customers regarding their experience with retirement products providers.

“A great burden of responsibility lies with the life insurance industry to step up and fill this advice gap as it has the experience, size and scale to make a real impact on the retirement problem,” said Mervin Law, co-founder of Debt Relief MLaw, Singapore. “Industry leadership needs to confront this critical issue and take action to address it. It is an opportunity not only for life insurers to grow their business but also to help avert what could potentially become a major social issue on a global scale in the next 10 to 20 years.”