A life less comfortable

A life less comfortable

The reality of retirement today is complex. Working age people aspire to enjoy well-earned years of rest and recreation, but are concerned about how they will fund their retirement years.

Ensuring a good standard of living in retirement is a big concern. Over a third (34%) of working age people doubt that they will be able to maintain a comfortable standard of living in retirement. Many are worried about running out of money (69%) and about having enough money to live on day-to-day (66%).

In addition, nearly a quarter (23%) expect their standard of living in retirement will be worse than their standard of living today, with working age people feeling particularly gloomy in the developed economies of France (54%), the UK (40%), Hong Kong (40%) and Australia (39%).

Ready - or not

Many pre-retirees think that they are not doing enough to adequately prepare for a comfortable retirement. Globally, almost two in five (37%) think their financial preparations are inadequate, a sentiment matched by retirees, 37% of whom say they were not prepared adequately or at all.

Reasons for this lack of preparedness are varied. Paying off mortgages and/or other debts (46%) is the biggest barrier preventing working age people from preparing adequately. Not starting to save early enough was the main barrier for retirees, with almost two in five (38%) acknowledging that they started saving too late to build an adequate retirement savings pot.

Other barriers to preparing for a comfortable retirement include not being able to afford to put enough money aside, cited by 35% of working age people and around 26% of retirees, and a lack of awareness of how much to save, acknowledged by 29% of retirees.

Juggling priorities

Retirement is not the main saving priority for 85% of working age people. The majority (81%) of working age people have already experienced life events which significantly impacted their ability to save for retirement. While some of these events can be planned for, such as buying a home/paying a mortgage (32%) or saving for children’s education (24%), many people also experience unplanned events which hamper their ability to save for later life.

A quarter (26%) of working age people across the world say the global economic downturn has significantly impacted their ability to save for retirement. This rises to nearly two in five (39%) in Mexico and around a third in Hong Kong (34%) and Malaysia (32%). In addition, one in five (20%) preretirees around the world say that their retirement saving has been significantly affected by an illness or accident stopping them or their spouse from working, while 10% say they have had to stop work to look after someone.

Looking back, starting sooner

When asked what they would have done differently to improve their standard of living in retirement, over a third (36%) of retirees across the world say that they would have started saving at an earlier age. This regret is greatest in Malaysia – where over half (53%) of retirees think they should have started saving earlier – followed by Mexico (48%) and India (47%).

Across the world, almost two in five (38%) of retirees say that you need to start planning for retirement by age 30 at the latest to maintain a similar standard of living to the one you enjoy when working. This number is significantly higher in the UK (62%), Australia (57%), the USA (47%) and Canada (45%). Far fewer retirees in Indonesia (12%), Taiwan (21%), Malaysia (21%) and Turkey (21%) recognise the need for people to start retirement planning so early in life.

Enough in the pot?

Globally, working age people expect that their retirement savings and investments (excluding pensions) will run out 11 years into their retirement. With retirees on average fully retiring at age 60 and with an average life expectancy of 781 years, pre-retirees typically face a seven year gap when they will be solely reliant on any state, employer or personal pension provisions they may have.

Almost two in five (38%) working age people are not or do not intend to start saving for retirement. The USA and Hong Kong buck this trend, where three quarters (75%) of working age people are saving for retirement.

Even more worryingly, almost a third (32%) of working age people over the age of 45 are not currently saving for retirement or do not intend to do so at all.

Pre-retirees who are not saving for retirement may regret not 1 Current life expectancy - World Health Organisation, US Central Intelligence Agency starting to save sooner, as almost two-thirds (65%) of retirees who failed to prepare adequately for a comfortable retirement say that they did not realise this until they had fully retired.

Confidence returns for some, but retirement savings still affected

The shadow of the global economic downturn still looms large on the financial horizon of working age people. While 48% feel more confident about their future financial prospects compared with a year ago, for almost half (45%), the cost of living is increasing faster than their income.

Compared with before the global downturn, two in five (40%) pre-retirees have either stopped or reduced their saving for retirement, whether through investments (25%), cash deposits (24%), annuities (21%), employer pension schemes (19%), personal pensions (19%) or insurance policies (19%).

Generating income for retirement

When retirees are asked about different ways to fund retirement, property features highly, with 40% owning or planning to own a second home in their home country or 15% overseas. In addition, around a third (32%) of retirees worldwide own or plan to own jewellery, gold or diamonds, while a smaller proportion own or plan to own antiques (15%), art (14%), classic cars (11%) and fine wines (10%).

For working age people worldwide, the idea of generating retirement income through these alternative methods is more popular than for today’s retirees. Two thirds (65%) plan to fund their retirement through a second domestic property and half (52%) through jewellery, gold or diamonds. Others are turning to overseas property (32%), antiques (24%), art (22%), classic cars (22%) and fine wines (19%).



Retirement can mean different things around the world. Some may view it as a time to relax after a life of work. Some may do things they never had the chance to do when they were younger. Others may see retirement as an opportunity to support their children as they take important steps in their adult lives - buying their first home or having children of their own. However, for many people around the world, these aspirations may not be easy to achieve. For many, the financial reality of life after work is less rosy.

When asked what fears or concerns they have about their retirement, almost half (47%) of working age people say they fear financial hardship. This fear is strongest amongst 25-44 year olds (49%) and in Australia (56%), Canada (51%), Singapore (51%) and France (51%).

One in ten (10%) working age people globally expect they will never be able to fully retire. This view is particularly strong in Australia (16%), Canada (15%), Singapore (15%), India (14%) and the USA (13%).

The reasons for not retiring are often financial. Two in five (40%) working age people around the world who think they will never fully retire say it is because they cannot afford to, while over a third (35%) believe they will need to keep working to maintain a comfortable lifestyle. Not being able to afford to retire is the main reason people believe they will never fully retire in developed countries, such as Canada (66%), Australia (64%), UK (61%) and the USA (61%).

Financial considerations are not the only reasons and some people see the benefit in continuing to work as they get older. Globally, almost half (47%) of working age people who believe they will never fully retire say it is because they want to keep active/keep their brain alert, with even higher proportions in India (70%), the UAE (61%) and Brazil (60%). Over a third (34%) worldwide who believe they will never fully retire say this is because they like working.

Despite a minority choosing to keep working into their later years, maintaining a comfortable standard of living during retirement is a real concern across the world. Over a third (34%) of working age people are not confident that they will be able to support a comfortable lifestyle in retirement. For women this figure rises to 38% compared with 31% of men.

Pre-retirees in France are the least confident, with three in five (60%) claiming they will not be able to maintain a comfortable retirement. In Taiwan (56%) and Turkey (54%) more than half of working age people share this concern.

However, in some countries confidence is high. Less than one in ten working age people in India (8%) and Indonesia (9%) say they are not confident about maintaining a comfortable standard of living in retirement.



Practical steps towards a better retirement

Here are some important insights and practical actions drawn from the research findings, which may help today’s retirement savers plan a better financial future for themselves.

Start saving early

More than a third (36%) of retirees say that starting to save earlier would have improved their standard of living in retirement. Not starting to save early enough was amongst the top reasons for retirees (38%) and pre-retirees (38%) feeling insufficiently prepared for a comfortable retirement.

Retirement can seem a long way off when you are young. Nevertheless, it is crucial to start making retirement plans as early as you can.

Know how much you need

On average, people will need to fund almost 20 years in retirement. Almost a third (30%) of retirees say they did not prepare adequately for a comfortable retirement because they did not realise how much they needed to save for their retirement.

Start thinking about the kind of lifestyle you want when you retire and how much you will need to fund it.

Refill the pot

More than a quarter (26%) of working age people say the global economic downturn has had a significant impact on their ability to save for retirement. It has also had an indirect effect, with 26% saying that losing their job, seeing a significant drop in their earnings (22%) and getting into debt/having severe financial difficulty (22%) affected their retirement saving.

It is easy for retirement savings to suffer when times are hard. With the worst of the global economic downturn behind us, start looking for advice on how to replenish any depleted funds in your retirement pot.

Expect the unexpected

A fifth (20%) of working age people say that illness or an accident has prevented them or their spouse from working, and this significantly affected their ability to continue to save for retirement.

Unforeseen life events can damage your retirement savings. No one can see into the future, but do consider what could happen and how this will impact your financial planning.

Happy investing

Source; HSBC- Global report