Defining Financial Success Across Generations

SINGAPORE: A stark generational divide is becoming increasingly evident when it comes to defining financial success. While baby boomers (1946-1964) may consider the expectations of younger generations unrealistic, Gen Z (1997-2012) is on a quest for significantly higher incomes, driven primarily by soaring living costs and shifting priorities.

What Salary is Needed for Comfort?

But what is the actual salary needed to live comfortably in Singapore in today's economic climate?

In a revealing YouTube video uploaded in January 2023, students from the National University of Singapore (NUS) shared their expectations for starting salaries, which ranged impressively between S$5,000 and S$10,000.

A more recent survey from answers.sg, conducted with over 5,000 participants in November, aimed to establish what constitutes a livable monthly salary in Singapore for 2024. The results showed a diverse opinion, with nearly 30% of respondents indicating S$9,000 is necessary, while 34% believed a salary between S$3,000 and S$3,999 suffices.

According to SmartWealth’s December 2024 report, the average median income in Singapore, factoring in employer CPF contributions, is S$5,197 monthly (S$62,364 annually). Without these contributions, the median drops to S$4,550 monthly (S$54,600 annually). For younger workers, the median salaries are S$1,580 for ages 15 to 19, S$3,042 for 20 to 24, and S$4,680 for 25 to 29, underscoring the financial challenges faced by Gen Z.

In contrast, boomers in the workforce earn a median of S$4,351 for those aged 55-60, while individuals aged 60 and older have lower median earnings of S$2,905 per month. This slight salary disparity between generations hides a more significant gap in spending habits and financial priorities.

Changing Financial Priorities Amid Rising Costs

The meaning of 'saving' has evolved over generations. While older Singaporeans tended to prioritize long-term goals such as retirement and property ownership, younger generations now adopt a concept known as 'soft saving.' This perspective emphasizes mental health, personal development, and enjoying the present.

The alarming rise in living costs exacerbates this situation. The Retirement Insights Report 2024 from Etiqa Insurance Singapore, which surveyed over 1,000 individuals across multiple generations, highlights that many younger Singaporeans are anxious about job stability, increasing living costs, and inadequate savings plans. In fact, financial planning often feels overwhelming to many.

Data released from the Department of Statistics Singapore reveals that between 2017/18 and 2023, the average monthly household expenditure has climbed from S$5,163 to S$5,931, marking a 2.8% annual increase. Meanwhile, household incomes grew by 4.1% per year, escalating from S$12,661 to S$15,473 during the same period.

Yet, even as household incomes have improved, Singapore has seen skyrocketing property prices – particularly for private homes – which reached a staggering median value of S$1.75 million in 2023, surpassing even Hong Kong.

Challenges and Needs for Salary Growth

Salary growth in Singapore is expected to lag behind that of neighboring Southeast Asian nations, according to professional services firm Aon. Furthermore, Numbeo estimates that monthly expenses for a family of four in Singapore (excluding rent) average around S$5,386, while costs for a single person are approximately S$1,491.

Considering these costs exclude rent – typically the most significant expense for residents – the finding that 34% of respondents perceive S$3,000 to S$3,999 as a livable salary may indicate short-term feasibility, particularly for individuals living alone. However, it's not a sustainable solution in the long run.

This financial strain contributes to the fact that about 25% of Singaporeans have yet to begin retirement planning. Among the reasons cited are immediate financial pressures (38%), dependence on CPF savings (34%), and insufficient savings (30%). Simultaneously, 63% of seniors express significant concern about mounting healthcare costs.

Conclusion