People around the world now saving seven years longer for retirement

People now expect to save for seven years longer than their predecessors for their retirement, according to new research from HSBC.

The report, Generations and journeys, the latest in HSBC’s long-running ‘The Future of Retirement’ series, reveals that working people feel under more pressure than ever to save for their retirement.

According to the research, based on the views of over 18,000 people in 17 countries, the current generation of retirees started saving for their retirement at 35 and retired at 58, saving for an average period of 23 years.

However, the report shows that working age people around the world now begin to save five years earlier, at age 30, and expect to retire two years later, at 60, meaning they face on average 30 years of retirement saving – seven years more than current retirees.

The gap is most marked in China (14 years), the UAE, (12) Australia (11) and France (11), where working people now expect to save for more than a decade longer than current retirees did. Indonesia is the only country surveyed where working age people expect to save for the same length of time as current retirees saved for.

Despite beginning to save for retirement earlier, many working age people still don’t think they are saving enough. More than one in three (38%) wish they had started to save earlier, and 28% say they should have saved more by putting aside a larger share of income.

HSBC’s report also uncovers that nearly a quarter (24%) of working age people have still not started saving for their retirement, including 12% of those aged 60 or over.

Years saving for retirement (average)

Years current retirees have saved Years pre-retirees expect to save Additional years pre-retirees expect to save
Average 23 30 7
China 9 23 14
UAE 13 25 12
Australia 26 37 11
France 24 35 11
Hong Kong 18 28 10
Argentina 24 33 9
Egypt 18 27 9
Singapore 20 29 9
Canada 26 34 8
Taiwan 16 24 8
UK 30 37 7
USA 28 35 7
India 20 26 6
Mexico 28 33 5
Malaysia 23 27 4
Indonesia 23 23 0

Funding retirement

Pre-retirees around the world have different approaches towards how they will fund their retirement. Diminishing state support in most countries may be a contributing factor towards this, with just 30% of pre-retirees expecting to help fund their retirement through a state pension or social security, versus 45% of retirees who are currently doing so.

Findings from a previous Future of Retirement report show that this loss of faith in state pensions has been going on for some time. In 2011, 45% of all respondents thought that their generation would be worse off in retirement because state pensions were not as generous as they used to be.

Some of the other common ways pre-retirees are likely to help fund their retirement include drawing on cash savings/deposits (42%), income from continuing to work to some extent (29%) and personal pension schemes (23%).

Aside from these more traditional ways of saving for retirement, working age people are also looking at alternative sources of funding, and the research reveals differences in their methods between countries.

Many pre-retirees are looking at using property for additional retirement income. Over one in ten working age people (12%) say that downsizing and/or selling a property will help them to fund their retirement, and this is particularly prevalent in Australia (26%) and the UK (22%).

This compares to just 6% of existing retirees globally who are using income from downsizing or selling a property to help fund their retirement.

In contrast, in Asia and the Middle East, support from family is expected to be a common way for pre-retirees to help fund their retirement – particularly in India (15%), Singapore (15%), Hong Kong (14%) and the UAE (14%). Globally, nearly one in ten (9%) working age people believe that financial support from their children will help fund their retirement.

Charlie Nunn, Group Head of Wealth Management, HSBC comments:

"People recognise that they are living longer and may not be able to rely solely on more traditional forms of funding for their retirement, including state provision. As a result, they are realising they need to start saving for retirement earlier than previous generations and to consider alternative methods to help fund their retirement. Even small amounts set aside today can go a long way to helping fund a comfortable retirement in the future."

Practical steps

HSBC’s research identified four actions that people can take to improve their financial well-being in retirement:

  1. Consider all your retirement expenses
    When planning for retirement, make sure to list all your possible retirement outgoings.
  2. Start saving earlier for retirement
    Plan to start saving for retirement earlier, to help build a bigger fund and allow it to grow for longer.
  3. Make sure your advice is professional
    Seek information from many sources, but make sure the advice you get is professional.
  4. Be prepared for financial ups and downs
    When saving for retirement gets difficult, make sure to review all your finances and seek alternative ways to help you continue towards a comfortable retirement.

Notes to editors

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 report, Generations and journeys, is the 13th in the series and represents the views of 18,207 people in 17 countries and territories worldwide (Argentina, Australia, Brazil, Canada, China, Egypt, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, United Arab Emirates, United Kingdom, United States). The findings are based on a nationally representative survey of people of working age (25+) and in retirement, in each country or territory. The research was conducted online by Ipsos MORI in September and October 2015, with additional face-to-face interviews in Egypt and the UAE.

Since The Future of Retirement programme began in 2005, more than 159,000 people worldwide have been surveyed.

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,000 offices in 71 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,596bn at 31 March 2016, HSBC is one of the world’s largest banking and financial services organisations.