A new global study by HSBC shows that Britain is the country in which those who are soon to retire have the worst financial prospects.
Among other things, the study found that a fifth of Britons in their late 50s and early 60s now expect to never be able to retire.
Fifteen countries where studied by HSBC, whose Future of Retirement report polled more than 16,000 people. The range of countries was varied, with both ‘developed’ economies such as the US and France, and quickly growing emerging market nations such as Brazil, India and China.
Majority of Retirement Unfunded
The report found that workers in the UK can expect, on average, a 19 year old long retirement. However the study also found that on average, savers are only prepared to support themselves financially for the first 7 years, leaving the average future retiree with a 12 year long shortfall period.
Future pensioners in the US seem to be more well prepared, as their savings will on average last them 14 years in retirement, twice as long as their British counterparts and the highest number of any country covered by the survey.
Fortunately, there are some steps being taken to close the gap between low savings levels and long expected retirements. A year ago the Government’s auto-enrolment initiative kicked in, prompting the largest employers in the UK to automatically enroll their staff in a company pension scheme.
Already, auto-enrolment has pushed over one million people to save for their retirement for the first time in their lives. Some of them were not able to save into workplace pensions before the reform, and some simply chose not to opt in to their employer’s pension scheme. When you instead have to actively opt out, more people continue saving.
However warnings have been raised about auto-enrolment giving savers a false sense of security, as the levels of savings in the default plans may not be enough for everybody, especially those on lower salaries or who are older but have not started saving yet.
Poor return on savings and low annuity rates means it’s more important than ever to properly save for a financially stable retirement.
When Brits who were already retired were polled on how long their savings would last them, the average answer was 13 years – almost twice of what today’s 55-64 year olds — the future generation of pensioners — can expect.