A new report by HSBC shows the planet is headed for a retirement-savings disaster, with 579 million retirees around the world dependent on government benefits for 37 per cent of their retirement incomes, on average, and an additional 1 billion people set to retire by 2050.
Australian retirees depend on state pensions and benefits for 43 per cent of their retirement incomes, while personal pensions account for just 25 per cent, according to HSBC’s The Future of Retirement: Life after work? report.
The survey, which covered 16,000 people across 15 countries, including more than 1000 Australians, found 70 per cent of retirees around the world regret not saving more, with 38 per cent conceding they did not prepare adequately, or at all, for a comfortable retirement.
As a result, 56 per cent of fully retired people are still saving in retirement while 14 per cent are considering re-entering the workforce to cover financial shortfalls.
Around two-thirds of semi-retired people regret giving up full time work so soon, with 66 per cent of retirees experiencing a noticeable drop in their incomes on retirement. Of these, 21 per cent said incomes had more than halved. Despite this, 52 per cent of retirees say they continue to spend as much as, or more than, they did before they retired, and yet 69 per cent want to leave an inheritance to their children.
The HSBC report found Australians are more pessimistic about their future, with 15 per cent of them convinced they’ll never be able to afford to retire, compared to 12 per cent globally.
Working-age Australians expect to retire on average at age 64, three years older than their parents, and five years older than the global average, who expect to retire at age 59.
A larger number of Australians, 79 per cent, said they experienced a drop in incomes on retirement with the fall more severe than the global average. Over 40 per cent of Australians indicated that their incomes had fallen by more than half since retirement, compared to 21 per cent globally. Similarly, 63 per cent of pre-retirees expect their incomes to be lower in retirement, although only 16 per cent expected it to be lower than 50 per cent.
When retirees were asked about the best financial advice they ever received, the most popular answer was “start saving at an earlier age”, followed by “don’t spend what you don’t have” and “buy your own home as soon as you can afford to”.
Close to 70 per cent of retirees expressed a desire to leave a legacy and inheritance to their families, estimating a median value of $499,000.
Over 1000 people participated in HSBC’s Australian survey.
Leng Yeow, Professional Planner Inspiring Advice, 19th September 2013