People around the world share the same dream of retirement. They want to spend time with family and friends and enjoy frequent vacations. But the reality is much different, with nearly half of all workers never saving money just for retirement, according to HSBC’s global report, “The Future of Retirement: A new reality.”
For its research, HSBC surveyed more than 15,000 working individuals over the age of 25 in 15 countries: Australia, Brazil, Canada, China, Egypt, France, Hong Kong, India, Malaysia, Mexico, Singapore, Taiwan, United Arab Emirates, United Kingdom and the United States.
Most people believe they will need at least 78 percent of their current income to live comfortably in retirement – a much higher percentage than they’ll likely achieve. According to the research, the median annual household income required for a comfortable retirement is $34,380 globally, which would require a U.S. male to have $505,000 in retirement savings by age 65.
Actual savings behavior falls well short of this, the report found, with 48 percent of respondents across the 15 countries saying they’ve never saved toward retirement. There are more non-savers in high-income countries such as the United Kingdom, France, Canada and Australia.
Nearly one-third of respondents say they will rely on the state for their main source of income in retirement, and 56 percent acknowledge they’re not preparing adequately to achieve a comfortable retirement.
Eighty-four percent of people felt the economic downturn significantly impacted their ability to save for retirement. Many people stopped saving for retirement for four years after the recession began. Based on average monthly retirement savings of $327 for a man, this translates into nearly $16,000 in retirement savings lost. Women save an average of $243 per month, so they would have lost nearly $12,000 in savings because of the economic downturn.
The study also found that younger people are more likely to suffer long-term negative impacts of life events, with those ages 25 to 34 years old being about three times more likely to go into debt and to turn to friends and family for help compared with those over the age of 65.
Seventy-seven percent of respondents say they have a financial plan in place for retirement, but most of them are informal, based on their own ideas, calculations and online planning tools. People were three times more likely to have an informal plan than one devised by a financial professional. That said, individuals with a financial plan saved more for retirement or their future.