This was among several key points Standard Life Singapore chief executive Neal Armstrong made yesterday, in a presentation before an audience of financial advisers at International Adviser’s annual Expert Investor Forum in Singapore.
Armstrong cited numerous studies and reports in making his case for advisers to be forceful advocates of the need for people to plan for their retirement early enough and well enough. One of the studies he quoted from was conducted earlier this year by Standard Life itself, of expatriate attitudes in certain markets towards retirement, which he said the company had commissioned in order to cut through the seemingly contradictory findings of various other entities’ research.
Although concerns vary between countries – as some have better social safety nets for their elderly than others – one of the biggest worries among people approaching retirement age is whether or not they will be able to afford the medical care they may require as they get older, Armstrong, who took over as head of Standard Life’s new Singapore operation last year, noted.
It’s a legitimate concern, since the trend is inexorably in the direction of living ever longer, as was highlighted in a major report released just within the last few days by the United Nations, he pointed out.
“It stated that by 2050 – or in not too many years’ time – there’ll be 9.7 billion people on the planet, which today has only 7.1 billion," Armstrong said.
"And that’s not down to a boom in the birthrates, but [rather] that people are living longer”, and as a result, there will be fewer working people in society for every person who is retired.
"Right now in Europe we have four working people for every pensioner. This will change, by 2050, to just two."
Common pitfalls
The most common pitfalls people make in planning for their retirement include not saving enough; starting too late; and underestimating the effects of inflation, according to Armstrong, who noted that part of the problem is that for most people, “there’s never a perfect time to plan”.
“If you look at somebody in their 20s, for example, this tends to be a time when they are students, or paying off student loans, or trying to get a first deposit together for a flat, or trying to save for a trip around the world, or whatever, so they don’t really think about saving for retirement. It’s too far away.
"Then you get into the [next] zone, which most everybody in this room is in, when you’re getting married, starting a family, buying your first house, buying a bigger house, thinking about kids’ education; so there is always a reason to defer [retirement planning].”
The unsurprising ultimate result, of course, Armstrong went on, is that people end up having to work longer than they might have wanted to, working even after they’ve formally retired, and otherwise make do – for example, by “go[ing] for a reduced lifestyle”.
Armstrong concluded with the observation, also possibly unsurprising, that a better alternative for such individuals would be for them to “come to Standard Life” early on and, with the help of their advisers, draw up a comprehensive retirement plan.
As reported, Standard Life opened its Singapore office last October, and appears to regard the market as among its most strategically important.
The company’s Asia and emerging markets business and joint ventures, which include a Hong Kong-based retail savings and investment business and life and asset management JV businesses in China and India, recently reported an operating profit of $7.8m (£5.1m, €6m).
