Middle-class Asians feel financially unready for retirement

There appears a deepening "retirement divide" across Asia, with a vast majority of the middle class feeling financially underprepared, according to separate consumer surveys from FWD Group and Sun Life.

Nearly three-quarters (71%) of middle-class consumers feel significant anxiety about their overall financial well-being, primarily due to the rising cost of everyday living.

Data from FWD indicates that healthcare costs and unexpected job loss are the primary drivers of this vulnerability, forcing many to focus only on short-term two-to-three-year financial goals.

Sun Life’s research echoes these findings, noting that the population is splitting into "Gold Star Planners" who retire by choice and "Stalled Starters" who delay retirement out of pressure.

The "sandwich generation" phenomenon is a major factor, with younger generations supporting their aging parents while simultaneously raising their own children.

Here are some key findings from the surveys:

• Seven in 10 of middle-class consumers feel significant anxiety about their overall financial well-being. The same number expect to continue working beyond retirement age, often out of financial necessity.
• Around 60% cite income needs as the primary reason to stay in work rather than personal fulfillment.
• Majority of Generation Y at 85% support their parents while also caring for children.
• More than half of middle-class respondents (61%) have never heard of family insurance plans despite wanting integrated coverage.
• One in five of planners have turned to generative AI for retirement advice, doubling since the previous year.
• Only 22% of the surveyed middle class feel very confident in their retirement plans, highlighting a massive opportunity for the insurance and wealth management sectors.

Generational struggle

The findings reveal that Generation X faces the toughest balancing act, as they must fund their children's education while preparing for their own retirement in an inflationary environment.

Among this segment, 62% worry that their savings won’t keep pace with inflation, and more than half rank guaranteed lifelong income as their top retirement need.

Generation Y respondents are similarly squeezed, with nearly half worrying about their ability to save for their own retirement while caring for both children and aging parents.

Generation Z is also feeling the heat early, with 53% expecting significant financial difficulties in the next five to 10 years due to rising daily expenses.

Sun Life’s research further highlights that 81% of respondents believe retirement should be a personal choice rather than a mandatory age.

However, the "Stalled Starters" group often feels they have no choice but to work, with 52% of those delaying retirement doing so because they simply cannot afford to stop.

By contrast, "Gold Star Planners" who stay in the workforce often do so for mental stimulation or social connection, enjoying a sense of agency that their peers lack.

Opportunities for insurers

Insurers are now pivotally positioned to address these protection gaps through innovative offerings such as flexible annuities and family-focused medical plans.

This growing literacy gap has prompted insurers like AIA and Manulife to ramp up their wealth management strategies to target an affluent middle class seeking more than just basic protection.

FWD has also responded to these evolving needs by launching inflation-conscious coverage and flexible family medical plans to help build resilience across generations in markets like Indonesia and the Philippines.

Meanwhile, Sun Life highlights that "health is a form of wealth," as those who feel physically and mentally fit are significantly more optimistic about their golden years.

The industry's role is consequently shifting from a purely transactional protection model toward one focused on "decumulation" and long-term income sustainability.