Many Americans are facing a significant fall in their living standards during the final seven years of retirement due to inadequately funded long-term savings, according to a new piece of research released today from HSBC Group.
‘The Future of Retirement: A New Reality 1 ’, based on a survey of over 15,000 consumers in 15 global markets, finds that Americans will on average run out of all funds beyond their state and occupational pensions some 14 years into retirement, thus leaving them potentially unprepared for additional living expenses in later retirement, such as funding long-term care.
The report also concludes that the average length of retirement internationally is now 18 years while the average retirement savings is expected to last for just ten. It predicts the situation is only likely to worsen as life expectancy continues to rise around the world.
Andrew Ireland, EVP, Retail Banking and Wealth Management, HSBC Bank USA, N.A., said: “The concept of retirement is evolving all the time, and we knew that the U.S. and the rest of the world is not prepared - but now we know by just how much.”“People are living longer, through tougher economic times, but expectations about their standard of living in retirement remain unchanged. As a result, millions of people around the world are facing years of hardship after their savings run out.” According to the study, currently 56% of the world’s working population is not preparing adequately for a comfortable retirement, with 1 in 5 (19%) saving nothing at all. Financial concerns were cited by those yet to retire as their greatest fear about living in retirement, with 57% saying they feared financial hardship, and 46% worrying that they would be unable to afford good healthcare provision. Yet in spite of this, when asked to choose, almost half (43%) of those not yet fully retired are willing to prioritize saving for going on holiday over saving for their retirement.