Gen Z, Millennials struggle to build savings as they juggle heavier responsibilities

Those aged 25 to 44, who have more liabilities and invest the least, a study said.

Gen Z and millennial investors or those aged 25 to 44 are lagging behind older counterparts in building their retirement savings, as they shoulder heavier liabilities like multiple loans, raising children, and supporting ageing parents, a study by DBS found.

This age group was the least invested amongst all pre-retirement age groups, with most only allocating 15% to 17% of their salaries to investment.

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.

Those ages 35 to 44 are the most stretched, as their debts slightly outweigh their liquid assets, 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, DBS said.

According to DBS, a 65-year-old retiree needs to reach $550k by 2030, up to $1.3m for those who have more aspirational wants such as travel, hobbies, and charitable giving. This amount can comprise one’s liquid assets, CPF savings and other income sources.

DBS said they recommend maximising their Central Provident Fund, 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. Additionally, Singaporeans should monetise property through rental, lease buy-back schemes or home equity products.