The average person in the United States will spend 21 years in retirement, but will deplete their savings after just 14 years, leaving a shortfall of seven years, according to an HSBC report released today.
"The Future Of Retirement: A New Reality" -- based on a survey of over 15,000 consumers in 15 global markets -- finds that the average length of retirement internationally is now 18 years while the average retirement savings is expected to stretch for only 10. The report expects the situation to grow worse as life expectancy continues to rise around the world.
The study found that people in the UK had the lowest level of savings for retirement, amassing just enough to cover 37 percent of their retirement income needs. People in Malaysia save up the highest proportion of the income they need at 71 percent on average. In the United States, people save up 67 percent on average, according to a press release.
Andrew Ireland, executive vice president, retail banking and wealth management for HSBC, said the study points out just how unprepared people are for retirement.
"The most surprising finding was that in spite of the inadequate state of retirement savings globally, when asked to choose, almost half of pre-retirees (43 percent) are willing to prioritize saving for going on holiday over saving for retirement," Ireland told Huff/Post50.
However financial concerns were cited by those yet to retire as their greatest fear about living in retirement, with 57 percent saying they feared financial hardship, and 46 percent worrying that they would be unable to afford good healthcare provision.
In addition, he emphasized another key finding from the report: U.S. retirees are facing a dramatic decline in their living standards during the final seven years of retirement due to inadequately funded retirement savings.
“People are living longer, through tougher economic times, but expectations about their standard of living in retirement remain unchanged," he said. "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 percent of the world’s working population is not preparing sufficiently for a comfortable retirement, with one in five (19 percent) saving nothing at all.
The study also showed how vulnerable retirement savings are to being raided to cover shorter-term needs, with almost a third of those yet to retire (29 percent) admitting they would dip into their retirement pot to deal with life events such as buying a home or paying for children’s education.
“People throughout history have faced the question of how to provide for the future, and today’s savers are no exception," Ireland said. "Yet as daunting as the current challenges may seem, the solution is very simple: the earlier you start to plan the better prepared you will be.
“For some this may mean beginning to save more, whereas others will choose to work longer," he added. "The key is for everyone, regardless of age or income, to make a plan to help them get the retirement they expect.”