By 2050 retirees will make up a fifth of the world's population and as of right now more than half of future retirees claim that they are not preparing adequately to achieve a comfortable retirement.
By 2050 retirees will make up a fifth of the world’s population and as of right now more than half of future retirees claim that they are not preparing adequately to achieve a comfortable retirement.
HSBC released its latest The Future of Retirement study, A new reality, and revealed that most people are falling short of a comfortable retirement. In fact, 48% say that they have never saved specifically for retirement. Furthermore, more of these non-savers are in high-income countries like the United Kingdom, France, Canada and Australia.
The report surveyed more than 15,000 people in 15 countries: Australia, Brazil, Canada, China, Egypt, France, Hong Kong, India, Malaysia, Mexico, Singapore, Taiwan, the United Arab Emirates, the United Kingdom and the United States.
Over half (56%) of non-retirees acknowledge that financially they are not adequately prepared for a comfortable retirement. Some of the countries where this peaks are Egypt (72%), Taiwan (71%) and the UK (66%).
“While people generally expect their incomes to fall during retirement, many expect their outgoings to be maintained at current levels or possibly increase in retirement,” according to the report. “Across all 15 countries, only 31% thought that their retirement income would stay the same or increase, while 46% thought that their retirement outgoings would stay the same or increase.”
According to the report, 43% of respondents would be more likely to save for a holiday than save for retirement. However, this is more common in Western and Latin American countries such as the UK, Australia and Mexico. Respondents in Asia were more drawn toward the long-term savings goals.
The report also highlighted what is already a well-known problem: people are outliving their money. On average, people expect their retirement to last for 18 years, but their retirement savings to last just 10 years.
Possibly to offset this retirement saving shortfall, more than one-third (35%) will continue to work to some extent in later life.
According to the report, the global median annual household income that people said they need for a comfortable was $34,380, which would require an American man retiring at the age of 65 to have $505,000 in savings (assuming he only lives to 80 years of age).
Regular savers—who also feel the most prepared for retirement—are most likely to be male, slightly younger, employed full-time and use professional planning tools.
Information in this article is reproduced with permission from The Future of Retirement, published in 2013 by HSBC Insurance Holdings Limited, London.
Retirement: A Reality Check - HSBC