T Rowe Price, which polled 1,000 Singapore residents, also launches retirement-focused products aimed at retail investors
[SINGAPORE] The nature of retirement is changing in Singapore, with a rise in so-called “micro-retirements” and “unretirements”, but many are unprepared to pursue these paths.
A survey from asset management and retirement investment management firm T Rowe Price, released on Monday (Sep 29), found that more than two in three working Singaporeans prefer flexible retirement, as opposed to retiring at the statutory age of 63.
Flexible retirement was defined as opting for micro-retirements, which are short, intentional breaks between careers, or unretirement, which is a return to work after the retirement age.
However, almost as many – 67 per cent – are unfamiliar with retirement products available in the market, and nearly a third who prefer flexible retirement are not prepared to move towards their ideal retirement plan.
Disconnect between aspirations and planning
Among the 68 per cent that preferred flexible retirements, out of the 1,000 Singapore residents polled, more than seven in 10 favoured micro-retirements over traditional retirement at the age of 63. Their top motivations included a desire to maintain work-life balance, relieve work pressure, and pursue personal interests.
A majority of the respondents also said that they believed micro-retirement is more suited to those above age 50 and should last less than a year. More than a third also indicated that they would want to have more than S$300,000 in assets before choosing this option.
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Meanwhile, nearly three-quarters of those who favour flexible retirements said that they supported unretirement. These respondents cited staying mentally active, maintaining their income, and easing financial pressure as reasons for wanting to go back to work after the age of 63.
About 40 per cent of them noted that they would consider returning to work within six months of retiring to seek part-time jobs in their original industry, with most of this subset comfortable with earning less during that period.
“The desire for flexible retirement transcends age, gender and income,” said T Rowe Price. The firm pointed out that more than half of the respondents over 50 years old and those earning more than S$7,000 a month found these newer retirement approaches appealing, instead of just the younger generation.
Still, respondents indicated that they lack the financial planning necessary for flexible retirement, with 30 per cent who want such a retirement being unprepared for it.
Many still rely primarily on time deposits and bank savings, options that “may not support the growth needed for a secure retirement”, even though 70 per cent said that they were comfortable with medium‑to‑high investment risk.
Additionally, 73 per cent said that they prefer products that reduce investment risk as retirement approaches, but nearly nine in 10 noted that they were unfamiliar with this investment framework.
“The disconnect between retirement aspirations and investment planning underscores the importance of financial education in risk management, as well as the need for investment approaches that balance growth and stability throughout different stages of life,” said Thomas Poullaouec, head of global investment solutions for Asia-Pacific, at T Rowe Price.
New retirement-focused fund for retail investors
T Rowe Price also announced new retirement allocation funds, its first retirement-focused products available to retail investors.
The new products will be exclusively available to HSBC clients in Singapore and Hong Kong for a limited period and will offer transparent allocation strategies, flexible fund-switching options and a “regular income potential”.
The funds feature T Rowe Price’s proprietary “glide path”. This guides the strategic asset allocation, automatically adjusting the balance between equities and bonds over time to optimise growth potential and risk management, with tactical overlays implemented by portfolio managers in response to market conditions.
The first fund serves post-retirement investors, who have been retired for up to 10 years; the product emphasises sustainable withdrawals through a conservative allocation mix. The second caters to pre-retirement investors who are within 10 years of retirement.
Both funds aim to provide monthly dividends at a fixed rate of 6 per cent per year, and investors will have the flexibility to switch between the two funds as their retirement timelines change.
