Marina Bay,Singapore © by toonman-Flickr-Getty Images

The Southeast Asian city-state of Singapore may boast of the highest percentage of millionaires in the world, but retiring in this wealthy financial hub is becoming even more difficult for the common man.

According to a recent study by HSBC, the citizens of this country, which has one of the highest per capita incomes in the world, face the grim prospect of running out of their savings almost halfway through retirement as the high cost of living and increased life expectancy eats into their nest egg.

Singapore has gradually moved up in human resources firm Mercer's global rankings of the world's most expensive cities, rising to sixth place in 2012 from eighth in 2011 and 11th in 2010.

"There is cause for concern from the finding that the retirement savings of people in Singapore will run out after nine years, which is about the time they are entering into frail retirement and a stage of their lives when medical costs and other elderly care expenses are expected to rise," Paul Arrowsmith, head of retail banking and wealth management, HSBC Singapore, said in the report released earlier this year.

"People are living longer, through tougher economic times, and expectations about their standard of living in retirement have risen," Arrowsmith added.

More than half of the 1,000 Singaporeans interviewed for the survey said that either they were not adequately prepared or not prepared at all for retirement as they expected to continue working beyond the age of 65 to be able to afford their desired lifestyle.

One also needs more money to fund one's retirement in Singapore. According to the study, the annual household income required to lead a "comfortable" retired life in Singapore is the third highest among Asia's major economies, behind Australia and Hong Kong, at $48,773. This figure is 68% higher than what was needed in 2011, the survey, which has been running for eight years, found.

The rising cost of living in Singapore has 58-year-old Singaporean Janice Tan worried about her retirement.

"I think the cost of living is really escalating a lot," Tan told CNBC. "During the Chinese New Year season, when I went to buy the goodies, it really shocked me, because the cost is really going up too fast."

Tan and her husband are currently paying for the education of their two children, including a 21-year-old daughter studying in Perth, Australia. While Tan, an administration professional, hopes to retire soon, she says she knows it might be another 10 years before that happens.

"As human beings we want more -- a more comfortable life. That's where the worries come in on whether you will able to survive," Tan said.

According to the study, of those not saving for retirement, nearly half said they were being held back by the cost of day-to-day living.

High costs have become a major cause of discontent among Singapore's residents. This prompted a rare protest in which about 3,000 people participated. They were voicing concerns over swelling costs driven by an influx of foreigners.

Foreigners, who account for almost 40% of Singapore's 5.3 million people, have been blamed for pushing uphousing prices and taking up jobs in one of Asia's major business centers.

Retirement fears

The top three fears about retirement cited by Singaporeans were poor health, financial hardship and not having enough money to provide for good healthcare, according to the study.

With retirement savings drying up at a time when Singaporeans are most vulnerable to health problems, funding medical bills could become a big burden, HSBC said.

Tan backed that sentiment, saying that medical bills from a motorcycle accident that her husband was involved in last year have been a drain on their finances.

"As we get older, I realize it [funding health costs] is a more important thing to sort out," said Tan. But the high cost of living is coming in the way. "I can't imagine how much more the cost of living is going to go up to," she added.

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