Gen Z faces significant obstacles, according to the findings of the Sun Life Asia survey.
In a recent survey by Sun Life Asia, the importance of financial literacy and the role of financial advisors in managing finances and planning for the future has been underscored, especially in the face of rising inflation.
The second Sun Life Asia Financial Resilience Index reveals significant impacts of inflation on financial security and planning across generations, with Gen Z notably feeling the least financially secure. Inflation is causing many to prioritise immediate financial needs over long-term planning, leading to a focus on day-to-day expenses rather than future financial goals.
The survey found that 90% of Singaporeans and 92% of Malaysians surveyed are feeling the pressure of inflation. This shift in focus is reflected in the top financial priority for 60% of respondents, which is managing day-to-day expenses, up from 54% last year. Retirement planning, which was previously the second most important goal, has dropped to sixth place this year.
In Singapore, there was a 19% decrease in people owning life insurance and an 18% decline in investment-linked products compared to the previous year. This decline reflects how households are struggling with rising costs and cutting back on insurance, which traditionally helps ensure long-term financial resilience.
The survey also reveals that overall perceptions of financial security have slightly improved, but the reality is more sobering, particularly for Gen Z. Gen Z feels the least financially secure among all age groups surveyed, with only 57% feeling financially secure, compared to 66% of Millennials and 69% of Baby Boomers.
In contrast, a higher percentage of Baby Boomers appear relatively more financially secure, despite inflation, but still have to balance current expenses with future goals.
Sun Life emphasises that insurance remains a crucial tool for managing risk and maintaining long-term financial security amid these challenges. The findings suggest a need for stronger financial education and support, especially for younger generations like Gen Z, to build better financial resilience.
The survey also found that 40% of high resilience individuals work with financial advisors, while only 27% of low resilience individuals do. High resilience individuals are also more likely to read up on personal finance and invest for stronger returns, while low resilience individuals rely more often on informal networks or social media.
Despite slight year-on-year improvements, long-term financial preparedness remains dangerously low, with more than half of respondents (54%) still lacking a plan that extends beyond 12 months. Building emergency savings has also climbed the ranks and is now the second most important goal.
In an uncertain economic environment, it is crucial for individuals to prioritise financial literacy and seek the advice of professionals to build a more secure financial future.
[1] https://www.sunlife.com/sg/en/about-us/newsroom/press-releases/sun-life-asia-launches-second-financial-resilience-index-report [2] https://www.sunlife.com/sg/en/about-us/newsroom/press-releases/sun-life-asia-reveals-key-findings-from-second-financial-resilience-index-report [3] https://www.straitstimes.com/business/companies-markets/inflation-pressure-forces-more-singaporeans-to-focus-on-day-to-day-expenses [4] https://www.channelnewsasia.com/news/business/gen-z-least-financially-secure-among-all-age-groups-sun-life-asia-survey-2724566 [5] https://www.straitstimes.com/business/companies-markets/life-insurance-ownership-declines-in-singapore-amid-inflation-pressure
- The findings from Sun Life Asia's Financial Resilience Index report underscore the significance of cyber risk events for personal-finance management, especially in an uncertain economic environment, as more people prioritize day-to-day expenses over long-term financial goals and investments.
- As traditional investment vehicles like insurance and investment-linked products decline, it is essential for individuals to seek education and self-development resources to learn about alternative investment avenues that can protect their long-term financial security and resilience.
- In the face of rising inflation and increasing cyber risks, financial advisors play a critical role in helping individuals navigate these challenges, providing advice on managing cyber risks, prioritizing personal finance, and planning for a secure financial future.
