60% of Singaporeans Live Paycheck-to-Paycheck: Is Low Inflation Misleading?
Singapore, a nation long lauded for its fiscal prudence and high savings rates, faces a sobering reality check. Recent data reveals that a significant proportion of its workforce, estimated at 60%, is living paycheck-to-paycheck. This figure, derived from the ADP’s People at Work 2025 report covering 2024 data, places Singapore above the Asia-Pacific average of 48% and marks a notable increase from 53% in 2021. This trend is not confined to single-income households, with similar percentages observed even among those holding multiple jobs, underscoring a deep-seated financial strain. The confluence of rising living costs, stagnant real wage growth, and evolving lifestyle aspirations challenges the perception of a financially secure populace, prompting a closer look at whether headline inflation figures truly capture the everyday struggles of Singaporeans.
The Inflation Paradox: Beneath the Headline Numbers
While official inflation metrics for Singapore suggest a more subdued picture, the lived experience for many Singaporeans tells a different story. The Monetary Authority of Singapore (MAS) Survey of Professional Forecasters (MAS SPF) released in December 2025 indicated a median forecast for Consumer Price Index (CPI)-All Items inflation for 2025 at 0.9%, projected to rise to 1.5% in 2026. MAS Core Inflation, which excludes private transport and accommodation, was forecasted at 0.7% for 2025 and 1.3% for 2026. Indeed, the latest CPI data from the Department of Statistics showed that CPI-All Items rose by 0.9% between January and November 2025 compared to the same period in 2024. The monthly headline and core inflation print for November 2025 both stood at 1.2% year-on-year, remaining unchanged from October 2025.
However, consumer inflation expectations present a contrasting view. One-year-ahead headline inflation expectations increased to 3.5% in December 2025 from 3.3% in September 2025. This divergence highlights a perception gap, where the official ‘fixed basket’ approach to CPI may not fully encompass the specific spending patterns and increasing costs felt acutely by households in critical areas.
Rising Expenses: Beyond the CPI Basket
The financial fragility among Singaporeans is significantly reinforced by continuously escalating living costs. In its mid-2025 Cost of Living Index, Numbeo ranked Singapore as the fifth most expensive city globally and the highest in Asia, noting an 11% year-on-year increase in overall costs. The primary drivers behind this surge are consistently high housing, food, and transport expenses. The Household Expenditure Survey 2023 reported that these three categories collectively accounted for 63.2% of the average monthly household expenditure of $5,931 in 2023. Public housing resale prices, for instance, saw a 9.6% increase in 2024, nearly doubling the pace of growth observed in 2023.
While average monthly household income saw a 4.1% annual increase between 2017/18 and 2023, rising from $12,661 to $15,473, average monthly household expenditure also increased by 2.8% annually during the same period, from $5,163 to $5,931. This indicates that while incomes are growing, the cost of essential goods and services is consuming a substantial portion of earnings, making it challenging for many to build a financial buffer. The perception that low inflation is misleading stems from these ground-level experiences where specific, high-frequency expenses continue to rise, eroding purchasing power despite aggregate figures appearing modest.
Global Headwinds and Local Resilience: The Impact of Interest Rate Adjustments
A major event impacting Singaporeans in recent times has been the notable reduction in home loan interest rates offered by various banks. Foreign banks in Singapore, for example, have recently adjusted fixed home loan rates to as low as 2.45%, a significant decrease from approximately 3% earlier in the year and highs of around 4.25% in the previous year. This shift is largely influenced by global monetary policy, particularly decisions by the US Federal Reserve. The Fed implemented interest rate cuts in September and November 2024, bringing its benchmark rate to the 4.5-4.75% range. These global movements directly influence Singapore’s domestic interbank market rates, such as the Singapore Overnight Rate Average (SORA), which is widely used to price floating-rate home loans.
For Singaporean homeowners with floating-rate mortgages, the decline in SORA, influenced by the Fed’s actions, means lower monthly repayments. Analysts further anticipate that fixed home loan rates could potentially dip below 2% by the end of 2025. This enhanced affordability has invigorated the real estate market, leading to an uptick in new private home sales. While the Monetary Authority of Singapore (MAS) manages monetary policy through the exchange rate rather than directly setting interest rates, it has maintained its policy stance, keeping the prevailing rate of appreciation of the S$NEER policy band steady since October 2025, with its next monetary policy statement expected by the end of January 2026. This approach aims to conserve policy space amid global uncertainties while ensuring medium-term price stability. Singapore’s economy is projected to grow by 1.8% in 2026, easing from an estimated 4% in 2025, as global trade pressures persist. However, domestic factors like construction projects and strategic digitalisation are expected to provide support.
Impact on Financial Planning for Singaporeans
The prevailing paycheck-to-paycheck lifestyle has profound implications for critical aspects of financial well-being, including investment in Singapore, retirement planning, and wealth accumulation. With immediate expenses consuming the bulk of incomes, many find it challenging to allocate sufficient funds towards long term investment goals.
Surveys reveal that a significant portion of Singaporeans, specifically 42%, initiate retirement planning five years or less before their retirement age, while 15% do not plan at all. A substantial 60% of non-retirees reported postponing their retirement primarily due to the need to save more, cover escalating living expenses, and manage increasing healthcare costs. Indeed, the cost of living and healthcare expenses are cited as the main challenges by 64% and 43% of unprepared retirees, respectively. To address this, the government is taking steps, such as increasing CPF contribution rates for senior workers aged 55 to 65 by 1.5% starting January 1, 2026, and implementing the Matched MediSave Scheme (MMSS). The official retirement age is also set to increase to 64 on July 1, 2026, with the re-employment age rising to 69.
For those looking to build wealth accumulation, diversifying investments strategically becomes crucial. Amid global challenges like currency fluctuations and trade tensions, experts suggest resilience can be built through strategic diversification, including exposure to Asian markets, healthcare, and private markets. Private credit funds are gaining interest for their yield enhancement and floating-rate income. While equity investment remains a cornerstone of long-term growth, a balanced portfolio that considers both local and international opportunities is vital. Younger generations, however, are showing a trend towards planning for a “multi-phase” life that incorporates “mini-retirements,” often funded through personal savings and investment income, rather than solely focusing on a single, distant retirement.
Navigating the Economic Landscape: A Forward Look
The narrative of Singaporeans living paycheck-to-paycheck despite low headline inflation underscores the importance of understanding the granular details of household finances. While recent reductions in mortgage rates offer some relief for homeowners, the underlying pressures from high living costs, particularly in housing, food, and transport, continue to challenge the financial resilience of many. As Singapore navigates a complex global economic environment marked by evolving trade dynamics and technological shifts, individuals must adopt proactive financial planning strategies. This includes a disciplined approach to investment in Singapore, diligent retirement planning that accounts for rising expenses and longer lifespans, and strategies for sustainable wealth accumulation that go beyond immediate income flows. Understanding these dynamics is key for Singaporeans to secure their financial futures amidst an evolving economic landscape.
