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The Future of Retirement

11/09/2018
Retirement
Economics

Key Takeaways

  • 42% of working age people typically save for short-term goals rather than longer terms plans
  • 33% of working age people are paying into a retirement account each month
  • 3% of working age people are currently saving for future nursing/care home fees
  • 45% of working age people are predicting a comfortable retirement

The cost of ageing

Almost half (45 per cent) of working age people in the UK expect a comfortable retirement but they are in for a shock as only (33 per cent) pay into a retirement account every month. Planning for life after work is crucial and many are not making adequate, or even any, financial plans.

The Future of Retirement is a world-leading independent research study into global retirement trends. It provides authoritative insights into key issues associated with ageing populations and increasing life expectancy around the world.

These findings are from the fifteenth edition in the series and represent the views of 17,405 people in 16 countries and territories.

This factsheet represents the views of 1,002 people in the UK.

There are also some practical tips to help people plan for the retirement they want.

UK key findings

Planning for the long haul

The road ahead

The reality of the here and now often takes precedence over preparing for life after work. One in three people (31 percent) agree it's better to spend money on enjoying life now than saving for retirement. And two in five (42 per cent) of working age people typically save for short-term goals rather than longer term plans.

With two in five people (38 per cent) saying they live on a day-to-day basis financially, this approach could be storing up problems for later.

Many need to act now to secure a happy future retirement. Only a third (31 per

One in six working age people anticipate no difficulty independently managing their finances in retirement

cent) of working age people have a financial plan in mind and just under a quarter (23 per cent) have sought financial advice to help plan for retirement. In addition, just under a third (29 per cent) of working age people are currently saving for their retirement.

Peter Pan pension planning

Could a hesitation to see themselves as old lie behind a reluctance to plan? Almost two in three working age people (59 per cent) don't see themselves as 'old', and just under three out of five (58 per cent) feel younger than their actual age. What's clear is that many people, whether young or old, are not adequately anticipating the financial requirements of later life. Only one in six (16 per cent) working age people anticipate no difficulty independently managing their finances throughout retirement.

Talking care

Financial planning for potential care costs is not top of mind for many. Around a third of working age people are aware of the cost of living in a residential home (37 per cent) or the cost of home social care (32 per cent). This is despite over half (56 per cent) claiming to be concerned about affording residential care when in retirement.

Those approaching retirement are better informed. Fifty-one per cent of those aged between 55 and 64 are aware of the costs associated with care. This proportion grows as people get older, with 59 per cent of 65 to 74 year olds aware of residential care costs.

Pet Priorities

Few are actively preparing for potential care costs. Only 3 per cent of working agepeople are saving for future nursing or care home fees. In fact, people are more likely to spend money on their pets (25 per cent) than on saving for future nursing or care home costs.

This attitude does change with age. Twice as many over 65-74 are saving for future care costs than those aged 45 to 54.

Bank of son and daughter

Many across the UK anticipate help from their family network. Around a quarter (23 per cent) of working age people expect their children will support them at some point in their retirement.

Evidence from current retirees suggests this may be optimistic. While two-thirds (65 per cent) of those already in retirement receive regular income from government pensions or social security, none receive financial support from their children.

With limited income, it's important to know what outgoings you may still have during retirement. Five per cent of retirees are still paying the mortgage on their primary home and 10 per cent are paying rent.

 

Understanding Retirement

Slowing down

Most people don't realise their retirement will likely have two stages. Straight after finishing work people tend to be busy, independent, more agile and in better health. Half (51 per cent) think this active stage will be the longest phase of their retirement.

Half of working age people expect to continue working during retirement

Indeed, for many it may not be 'retirement' at all, with half of working-age people (48 per cent) predicting they will continue working to some extent and a fifth (18 per cent) hoping to take advantage of the extra time to start a business or new venture.

Later comes a second stage where some people may start to need assistance with day-to-day tasks such as physical activities and going abroad. This is when they are likely to incur most cost. Just below half (43 per cent) believe it will be the costliest phase of retirement.

Who pays?

Most people expect to pay for the first active stage of retirement themselves. Fifty-six per cent anticipate funding retirement through a pension scheme, and 39 per cent through personal savings.

Most people expect to pay for the first active stage of retirement themselves. Fifty-six per cent anticipate funding retirement through a pension scheme, and 39 per cent through personal savings.

Anticipate the best

Getting older brings uncertainty for many. However, most working age people feel hopeful about their retirement. They look forward to spending time pursuing old and new hobbies and interests (74 per cent), having more freedom and opportunities (71 per cent), spending more time with friends and family (66 per cent) and getting fit (37 per cent).

Reality often matches expectation. Seventy-one per cent of retirees regularly meet up with friends and family — a slightly larger proportion than working age people (66 per cent).

Current retirees describe retirement as a positive time associated with relaxation, tranquillity and satisfaction

All in all, retirees describe retirement as a positive time. More than half (62 per cent) associate it with relaxation, 54 per cent with satisfaction and 38 per cent with tranquility. The proportion of those who think retirement is less idyllic is much smaller — around a tenth think retirement is boring (12 per cent) or lonely (11 per cent).

Despite the lack of certainty and worries, and the avoidance of planning because of it, retirement is far from doom and gloom. People should ensure they have planned and prepared for it, but look forward to one of the most relaxed and happy periods in their lives.

Practical Steps

Here are some practical steps drawn from the research findings, to consider when planning for the retirement you want:

 

The research

The Future of Retirement is a world-leading independent research study into global retirement trends, commissioned by HSBC. It provides authoritative insights into the key issues associated with ageing populations and increasing life expectancy around the world.

This is the fifteenth in the Future of Retirement series and represents the views of 17,405 people in 16 countries and territories. Since The Future of Retirement programme began in 2005, more than 194,000 people have been surveyed worldwide.

The survey

The findings are based on a representative sample of people of working age (21+) or in retirement, in each country or territory. The research was conducted online by Ipsos MORI in November and December 2017, with additional face-to-face interviews in the UAE.

The 16 countries and territories are Argentina, Australia, Canada, China, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, Turkey, United Arab Emirates, United Kingdom and United States.

Retirees are people who are semi or fully retired. Working age people are those who have yet to fully or semi-retire. Figures have been rounded to the nearest whole number

Additional disclosures

HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner. You are not permitted to use, for reference, any data in this document for the purpose of (i) determining the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments, (ii) determining the price at which a financial instrument may be bought or sold or traded or redeemed, or the value of a financial instrument, and/or (iii) measuring the performance of a financial instrument

Disclaimer

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