MORE Singaporeans are investing and on track with their investment goals, with fixed income assets such as Treasury bills (T-bills) playing an important role, a survey by OCBC has found.

According to the bank’s annual financial well-being index, published on Thursday (14 November), the number of respondents investing increased by 9 percentage points to 88%.

Among those who invested, the percentage of their income allocated to investments also increased by 10 percentage points to 26 percent.

This comes as the 2024 Financial Wellbeing Index score rose by 1 point to 61 points, which OCBC noted is in tandem with economic growth.

But the study also finds some troubling trends, including poor retirement planning among dual earners without children (Dinks) and a tendency to overspend among young adults.

OCBC’s annual survey of around 2,000 adults aged 21 to 65 is an analysis of the financial well-being of Singaporeans.

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About 43% of respondents who invested held fixed income securities and bonds, such as Singapore government bonds, T-bills and corporate bonds. This is up 5 percentage points from last year.

Meanwhile, 33% hold Singapore shares and 25% hold unit trusts, down 3 percentage points each from last year.

The top three sources of passive income were dividends from equity investments, interest income from fixed income securities and rental income.

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Overall, 44% of those who invested said they were on track with their investment goals, up 4 percentage points from a year earlier, although the average rate of return on investments fell to 0.1% in 2024, from 0.4% in 2023.

Generation Z, young millennials are more likely to overspend

The survey found that Singaporeans in their 20s – known as Generation Z and young millennials – are increasingly spending beyond their means to keep up with their peers.

About 27% of Singaporeans in this age group do so, up from 19% in 2023.

This can be attributed to their tendency to “live in the moment”, OCBC said.

Some 41% of 20-year-olds said they make impulse purchases based on current wants and impulses, in areas such as concert tickets, plane tickets and online shopping.

Meanwhile, 41 percent of credit card holders in this group also only pay the minimum amount on their credit card, compared to the other age groups, where the figure is below 30 percent.

Retirement planning

OCBC also found that Dinks – those who are married, engaged or in a serious relationship, have no children and are not financially supporting their partner – are less prepared for retirement than their parents.

The Dinks fared worse than their parents on indicators of retirement planning, having regular passive income and making sure their dependents are financially cared for for at least 12 months in the event of death.

There was also a smaller proportion of Dinks practicing financial virtues.

Virtues include ensuring that their finances are passed on in the event of death; sticking closely to a budget; knowing about tax reduction schemes, reviewing financial plans annually and seeking professional advice.

These individuals may not feel the urgency or need to plan for the long term given their childless dual-income status, OCBC said.

However, the Dinks still fared better than their parents in 16 out of 24 indicators, particularly in the areas of debt and crisis management.

But Tan Siew Lee, head of OCBC Group Wealth Management, noted that financial well-being is more than the amount of money one has.

Yvonne Chen, vice-president of group customer experience at OCBC added: “In some ways, (Dinks) are better in some of the indicators, but because they are quite lacking in retirement planning, I wouldn’t consider them actually doing it . better.”

In the lender’s report, the average age of the Dinks surveyed was 38, while the parents averaged 44.

OCBC noted that retirement has consistently been one of the weakest performers since the index was launched in 2019.

About 54% of respondents have started financial planning for retirement, down 6 percentage points from last year.

About 24 percent said they either plan to start or have started planning for retirement at age 50 or later.

This is because they feel they can only be “thrifty and thrifty”, “don’t want to think too far ahead” or “still have time to start planning”, the survey found.

But more are choosing the most basic retirement lifestyle, especially among respondents who are over 60, which is rising 21 percentage points a year to 63%.

However, 75% of 60-year-olds who have chosen the basic retirement lifestyle still underestimate the amount they need for retirement.

Among Dinks, 85 percent of respondents without a retirement plan also underestimated the amount needed for retirement. This figure is 80% for parents.

Tan said Singaporeans probably underestimate the effects of inflation. “If you’re not actively planning for retirement, you wouldn’t be looking at the price tags,” she said.

Chen added that Singaporeans are strong savers, which can lead to the misconception that savings alone are enough for retirement.

“If you’re just saving without any interest to beat inflation, then you’re not actively planning for retirement,” she said.