Sun Life has warned that rising living costs are eroding household financial resilience across Asia, as inflation continues to reshape spending habits and weaken long-term financial security.
The findings come from the insurer’s third Financial Resilience Index, published by Sun Life Asia, which shows that only 25% of people surveyed are now considered highly financially resilient, down from 32% in 2025.
Meanwhile, just 13% of respondents said they feel fully secure about their financial position, compared with 19% a year earlier, underscoring the impact of sustained cost-of-living pressures across the region.
According to the study, more than eight in ten respondents (83%) said inflation has made it harder to cover monthly expenses, while rising prices for everyday essentials continue to weigh heavily on household budgets.
Grocery prices were identified as the biggest pressure point, affecting 95% of respondents, followed by utilities (94%), transport fuel (92%), healthcare (91%), and cooking fuel (91%).
The report points to a growing shift towards short-term financial decision-making as families adapt to affordability pressures. More than half of respondents (55%) said they are planning no further than one year ahead, while 53% identified managing day-to-day expenses as their top financial priority over the next 12 months.
At the same time, financial resilience appears increasingly fragile. Around 61% of respondents said they would struggle to cope for more than six months without external financial support in the event of job loss or illness.
Many households are already making trade-offs to manage costs. One in four respondents said they are drawing down savings, 27% are reducing or skipping essential spending, and 10% have paused retirement contributions.
The report suggests that financial literacy is emerging as a key differentiator in how households respond to economic pressure. Respondents with stronger financial knowledge were 48 percentage points more likely to feel confident about their financial position and 43 points more likely to feel optimistic about the future. They were also less likely to experience frequent financial stress.
The findings come against a backdrop of heightened geopolitical uncertainty and inflationary pressures, including rising energy costs linked to Middle East tensions and broader macroeconomic volatility.
David Broom said: “What stands out this year is not just the scale of cost pressure but how it is changing financial behaviour. Rising living costs are forcing people to rethink how they manage their money on a day-to-day basis, with the price of food, fuel, and household bills placing increasing pressure on budgets.
“As a result, many people are becoming more focused on short-term financial decisions, and that shift is starting to affect their financial resilience.”
The report also found a sharp rise in the use of generative AI tools for financial guidance, with 60% of respondents saying they now regularly use GenAI for financial advice, up from 18% in 2025. However, Sun Life said wider access to digital tools has not consistently translated into stronger preparedness or confidence.
Broom added: “As financial decisions become more short-term, the risk is that people lose sight of longer-term outcomes. Even with more access to information and tools, navigating complex financial decisions still requires guidance. This is where professional financial advice continues to play an important role in helping people turn short-term choices into long-term plans.”
The findings highlight growing opportunities for insurers and financial providers across Asia to position protection, savings, and advisory services around resilience, affordability, and financial literacy as households navigate a prolonged cost-of-living squeeze.
