The economic downturn has made it harder for many people to save for their retirement

How can health and insurance systems adapt to changing needs as the world gets older? Do expectations about work and retirement need to change? And how can people make adequate provision for a long, healthy and active life after work?

These questions are relevant to individuals and public authorities worldwide. More than 20 per cent of the global population will be aged 60 or over by 2050, up from less than 10 per cent in 1990, according to the United Nations. This is not just a question for developed countries: by 2050 more than three quarters of the world’s over-60s will live in nations we call “emerging” or “developing” today.

The way people think about retirement is already changing. Public authorities in countries including the UK have sought to increase the age at which people can draw a state pension, and employers have scaled back the pension benefits that they offer.

Many people aspire to take control and put aside savings and investments of their own. But this can be challenging. The Future of Retirement A balancing act report from HSBC finds that many struggle to save as much as they would like. More than a third of today’s retirees worldwide wish that they had started saving earlier, the report shows.

Almost half of working-age people say their living costs are rising faster than their income

While some retirees have regrets about the past, many people of working age have anxieties about the future. More than two thirds of people of working age fear that they will run out of money during their retirement. People are likely on average to face a seven-year gap where they rely on any state, employer or personal pension they may have, the report suggests. The global economic downturn has made it tougher still to save. Some 40 per cent say they are setting aside less than they were before the downturn.

There is no quick fix. It is crucial for people working today to focus on finding the means to save a little for their future, now. This can be hard when times are tight. Almost half of working-age people say their living costs are rising faster than their income. Eight out of ten say that unexpected events such as illness and unemployment have made it harder for them to save. But the advice from those who have already retired is clear: it pays to start planning early.

Retirees around the world choose a number of ways to fund their retirement. Cash deposits, property and pension schemes remain popular options for around three in five. But a minority of retirees also turn to less traditional investments. Around a third of those surveyed own or plan to own jewellery, gold or diamonds. Smaller numbers place their faith in antiques (15 per cent), art (14 per cent), classic cars (11 per cent) and fine wines (10 per cent).

Choosing how to save or what to invest in is only part of the challenge. Many people find it difficult to estimate how much they will need to fulfil their hopes and ambitions in retirement. Around 30 per cent of retirees say that they do not know how much they need to save.

The amount will vary significantly from person to person. Some will spend money on healthcare, support other family members or treat their grandchildren. Some will aspire to use their retirement to fulfil lifelong ambitions – whether it be to learn a new skill, support a charity or travel the world.

For 30-year-olds, the end of their working life might seem a very long time away. But even a small amount saved now can increase their chances of enjoying a comfortable, fulfilling retirement.

Note
*United Nations, Department of Economic and Social Affairs, Population Division (2013): World Population Ageing 2013. The Future of Retirement A balancing act was published in January 2015. The report represents the views of 16,000 people in 15 countries: Australia, Brazil, Canada, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, Turkey, the United Arab Emirates, the United Kingdom and the United States. The findings are based on a nationally representative online survey sample covering people of working age (25 and over) and those in retirement. The survey was conducted by Ipsos MORI in August and September 2014. You can read the full report at www.hsbc.com/about-hsbc/structure-and-network/retail-banking-and-wealth-management