Gen Z and millennial retail investors fall behind their older counterparts in building nest egg for their later years, DBS study finds

Singapore, 12 Feb 2025 - As they increasingly shoulder heavier liabilities, Gen Zs and millennials, aged 25 to 44, are falling behind their older counterparts in building their nest egg for their later years. A DBS study found that they are the least invested among all pre-retirement age groups^[1], allocating just 15% to 17% of their salaries to investments. Over half of investments are allocated to fixed income investments, which generate lower returns that may not be sufficient to help grow and future-proof one’s wealth.

Among pre-retirement age groups, those aged 35 to 44 are the most stretched, as their debts slightly outweigh their liquid assets^[2], mainly due to home, car and credit card loans. Balancing the demands of raising children, supporting ageing parents, and advancing their careers often compels this segment to prioritise short-term financial needs over long-term retirement planning. However, their younger age grants them a longer investment time horizon, providing a strong foundation to work towards and achieve their retirement goals.

These research report findings are from DBS’ sixth instalment of its Financial Wellness series, which analysed aggregated and anonymised data of about two million DBS/POSB retail customers (as of June 2024), shedding light on the evolving retirement landscape and the importance of early financial planning. To help Singaporeans better understand their financial needs and work towards a comfortable retirement, DBS recommends that, by 2030, a 65-year-old retiree should aim to accumulate SGD 550,000 for more conservative needs and up to SGD 1.3 million for more aspirational wants, such as travel, hobbies and charitable giving^[3]. This amount can comprise one’s liquid assets, CPF savings and other income sources.

For an individual to meet these goals, DBS recommends the following:

• Maximising one’s Central Provident Fund (CPF)
• Building multiple passive income streams, such as through payouts from annuities/ retirement income insurance and diversifying one’s investment portfolio with equities via unit trusts, exchange-traded funds, managed portfolios in digiPortfolio and investment-linked insurance plans
• Monetising property through rental, lease buy-back schemes or home equity products.

Said Derek Tan, Head of Regional Property Research, DBS Group Research, “Across generations, the question of whether SGD 1 million is enough for retirement remains a hot topic. Our study has revealed that early financial planning for a well-structured nest egg can enable individuals to navigate immediate financial priorities while preparing for a fulfilling retirement. However, seniors will need to address the dual challenge of managing rising healthcare costs while ensuring their wealth continues to support a comfortable lifestyle in their golden years.”

While median expenses among retirees aged 65 and older are 62% lower than those for pre-retirees aged 55 to 64, with liabilities at a mere 3% of liquid assets, they are particularly vulnerable to healthcare inflation. According to the 2023 Household Expenditure Survey, healthcare accounted for 11% of monthly expenses for households with non-working persons aged 65 and above, which is significantly higher than the 6.7% average for all resident households.

“In addition to diversifying one’s investment portfolio, Singapore’s high home ownership rate – with property comprising nearly half of household wealth – offers seniors a significant advantage to boost their liquidity upon retirement. Notably, 99.7% of our retired customers have fully paid off their mortgages by age 65, underscoring the potential to unlock home equity as an additional retirement income source to secure a more comfortable retirement,” added Tan.

Here are the key takeaways from the research report:

1. Plan for sticky expenses during retirement, even as retirees’ median expenses are 62% lower than that for those aged 55-64. A comparison of SingStat data^[4] and DBS customers reveals that expenditures change at different life stages, with significant declines upon reaching retirement (SingStat: -60%, DBS: -62%). DBS also notes that a vast majority of retirees would have paid off their mortgages by then. While financial commitments decrease with age, they should still budget for sticky expenses such as healthcare spending and insurance needs.
2. Central Provident Fund (CPF) forms the foundation of retirement planning for most Singaporeans, of which median payouts cover more than half of retirees’ expenses. CPF’s Lifelong Income For the Elderly (LIFE) annuity scheme provides a crucial base for retirement income. As of 2023, 60% of all members have set aside the Basic Retirement Sum (BRS). However, relying solely on CPF may not be enough if they have aspirational wants. Individuals may consider leveraging their CPF savings to enhance their retirement income, through contributing the Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS), or participating in the CPF Investment Scheme (CPFIS).
3. More customers are actively managing their monies. Close to 1 million customers actively invest and insure with DBS/POSB, with many putting aside a fixed sum each month to grow their wealth. For example, the bank saw a year-on-year doubling of the number of Regular Savings Plan (RSP) investments into digiPortfolio, highlighting a rising trend among customers looking to invest their monies in quality assets and leverage the power of compounding to grow their wealth. Findings show that customers aged between 25 and 44 allocate close to 15-17% of their salaries into investments, while those between 45 and 64 invest close to 30-49% of their salaries.
4. Build multiple passive income streams for one’s retirement. As retirement nears, it is wise to build multiple income streams that can include insurance (such as annuities) and investment solutions. Consider: i) including more equities^[5] with higher returns in one’s portfolio to meet more ambitious retirement goals, ii) monetising property through rental, lease buy-back and/or home equity products, iii) supplementing retirement income with reliable sources like CPF LIFE payouts. This approach helps ensure a more sustainable retirement.
5. Younger customers can do more given a high proportion of their investments tend to be in fixed income. Even with smaller initial investments, younger people who start early benefit significantly. Those aged 25 to 44 currently allocate 15-17% of their monthly salaries to investments, but over half goes to fixed income (like T-bills and Singapore Savings Bonds), whose returns may not be sustainable. Given their longer time horizon, younger investors can consider allocating a larger portion to other asset classes (such as equities) for potentially higher returns.
6. Reaching one’s retirement goals sooner, or setting even more ambitious ones, is achievable. The bank’s analysis shows that a 25-year-old aiming for a retirement goal of between SGD 550,000 and SGD 1.3 million will need to invest between SGD 360 and SGD 850 per month, assuming an annual return of 5%. However, if one is unable to invest so much or would like to reach their retirement goals earlier, consider a portfolio with more equities. Historically, equities have averaged 10% annual returns over the past 15 years, which could help one achieve the same goal with less capital or accelerate their progress. While equities are more volatile, consistent investing over a longer time horizon can mitigate this risk.
7. The vast majority (99.7%) of the bank’s retired customers can tap the hidden gold in their property to boost retirement coffers. Most Singaporeans will have fully paid off their mortgages by the time they are 65, as DBS found that only about 0.3% of our retired customers have outstanding balances. Singapore’s high home ownership rate, along with property accounting for 44% of household wealth, provides retirees with a significant potential resource. Property ownership offers retirees the flexibility to generate passive income or explore other monetisation strategies. Singaporeans who have benefitted from the property boom in both public and private markets over the past decades are sitting on substantial gains that can be reaped, if needed. While some retirees view property as a legacy asset, those needing liquidity can explore options such as government lease buy-back schemes and home equity loan products to boost retirement funds.
8. Lastly, consider these four money habits: (i) save regularly and build reserves for emergencies; (ii) ensure adequate protection against large medical bills and loss of income; (iii) invest consistently while diversifying one’s portfolio with insurance and investment solutions; and (iv) generate multiple passive income streams for a more comfortable retirement.

Meanwhile, more individuals are taking charge of their financial future, with one million DBS/POSB customers actively investing and insuring. The doubling of Regular Savings Plans (RSPs) set up on DBS digiPortfolio over the past year highlights a growing trend towards entrusting experts to make their money work harder. This reflects a shift towards long-term planning and the power of compounding to achieve financial security.

To help make investing even more accessible for all, DBS has lowered the minimum investment sum for three of its digiPortfolios (Retirement, Income, Global Portfolio Plus), where investors are able to invest in ready-made, professionally managed portfolios with only SGD 100 to start^[6]. It has also shaved recurring fund house fees by up to 50%, through rebate-free unit trust share classes for the SaveUp and Retirement digiPortfolios. In doing so, customers will benefit from the lowered cost of investing which potentially translates to greater long-term returns.

The bank recently launched the ‘decumulation’ feature of its Retirement digiPortfolio which allows investors, who have reached their desired retirement age, to receive regular payouts by setting up recurring withdrawals from their portfolio. Also included is a calculator that allows customers to compute their monthly withdrawal sum in a way that ensures they do not outlive their retirement nest egg. Together, these solutions contribute towards the bank’s broader financial literacy efforts to demystify the concept of decumulation and how it can enhance retirement adequacy for customers.

“Financial planning doesn’t have to be daunting – it’s about taking small, achievable steps to build a more secure future,” said Lorna Tan, Head of Financial Planning Literacy, DBS Bank. “At DBS, our role is to cut through the clutter and empower Singaporeans with the right tools, insights, and expert advice to navigate their journey with confidence. We have supplemented this process with four essential money habits: Save, Protect, Grow, and Retire, and their respective rules of thumb. For instance, by adopting the ‘Pay Yourself First’ guideline, setting aside savings before spending, and leveraging the power of compounding through investments, individuals can steadily work towards their retirement goals. This is in addition to CPF – a robust social security savings scheme the government has in place – that will help boost the retirement adequacy among Singaporeans.”

DBS/POSB customers have been leveraging the bank’s wide range of savings, protection and investment solutions for their respective needs. More customers have also been using the bank’s proprietary digital financial and retirement planner – accessible via the “Plan” tab on DBS/POSB digibank – to track their saving and spending patterns, as well as protect, invest and manage their finances. In Singapore, those who engaged with nudges and used the bank’s AI-powered financial planning tool saved two times more, invested five times more and were nearly three times more insured than non-users. In addition, customers can tap on the bank’s financial planning hub for more budgeting, insurance and investment tips. For more information, please visit: https://www.dbs.com.sg/personal/nav/index.page


For the full report, please see attached or click here (PDF, HTML)

^[1]Those aged 25 to 34 have the least investments by 2 percentage points. They allocate 15% of their salaries to investments; however, they have the greatest investment risk appetite with 48% allocated in equities, ETFs, mutual funds etc., and have lower liabilities (as % of liquid assets) at 40%.
^[2]Based on the report, the liabilities among those aged 35 to 44 are at 101% as a percentage of liquid assets, while those aged 25 to 34 have liabilities 40% of liquid assets. Liquid assets include cash savings and investments.
^[3]Recommendation is based on the 2023 Household Expenditure Survey by Singstat and assumes a 2.5% annual inflation rate. A 65 year old retiree with conservative spending habits will need at least SGD550,000 by 2030 to maintain their lifestyle for 20 years, with the required amount doubling to SGD 1.3 million for the top 20% of retirees with more aspirational lifestyles.
^[4]Source: Report on the Household Expenditure Survey 2023 (SingStat, Nov 2024).
^[5]This report defines equities to include well-diversified equity indices tracking funds, ETFs, unit trusts, investment linked plans, and/or digiPortfolio.
^[6]It previously costed SGD1,000 to invest in these portfolios.




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