Most Americans will run out of money about 14 years into their retirement.
According to HSBC Group's "The Future of Retirement: A New Reality," a survey of more than 15,000 consumers in 15 global markets, Americans will face a significant fall in their living standards during the final seven years of retirement due to inadequately funded long-term savings.
The report found that the average length of retirement internationally is 18 years, while the average retirement savings is expected to last 10 years. It predicts the situation will only worsen as life expectancy continues to rise globally.
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"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," said Andrew Ireland, executive vice president for retail banking and wealth management at HSBC Bank USA, N.A. "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 survey, 56 percent of the world's working population is not adequately preparing for retirement, with roughly one in five, or 19 percent, saving nothing at all.
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. Yet in spite of this, when asked to choose, almost half (43 percent) of those not yet fully retired are willing to prioritize saving for going on holiday over saving for their retirement.
The study also showed how vulnerable retirement savings are to being raided to cover shorter term needs, with almost one-third of those yet to retire (29 percent) admitting they would dip into their retirement savings to cope with life events, such as buying a home or paying for children's educations.
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