How Long Will Your Retirement Savings Really Last?
A new study by HSBC highlights retirement savings around the world—or lack thereof...
The modern age of medicine has lead to a longer life expectancy, something few people would complain about. But this has coincided with a global economic downturn, where unemployment levels are high, taxes are rising, and almost everyone is feeling the pinch.
This is affecting retirement savings. On average, people around the world have a 44% shortfall in their retirement savings, the HSBC study found.
And though retirees in the U.S. are having a tough time, they fall below the average. The biggest problem is in the United Kingdom.
In the U.K., the average length of retirement is 19 years. But according to the HSBC study, the average citizen expects savings to run out after just seven, covering only 37% of retirement.
Also in the top five were Egypt, France, China, and Taiwan. But Egypt also expected the shortest retirement—just eleven years.
Source: The Telegraph
The reason this issue is so pressing in the U.K. is unclear. But the study does not heavily consider workplace pensions, says Joanne Segars of the National Association of Pension Funds. This, at least, will continue to provide income even if savings do run out.
Still, a decline in retirement planning is a growing issue.
The Telegraph reports:
Figures last month from Nest, the state-provided default pension scheme, showed that seven in 10 private sector workers do not currently pay into a retirement scheme. The number of “active” pension savers in the UK fell from 12.2m at the peak in 1967 to 8.2m in 2011, according to the Office for National Statistics.
But if these people are becoming more reliant on the workplace pension system, it's a mark of poor planning that retirement savings will still run out after seven years. Retirees are likely keeping their old lifestyle without the funds to support it.
Added factors such as paying for a child's education can affect how much is saved, but unplanned factors such as caring for a family member or health issues are also something to take into account.
And unsteady work in the shaky economy has likely hurt people's ability to save lately.+7
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