A savings shortfall of 12 years faces British retirees while the UK ranks last in an international poll to discover preparation levels for retirement, a study has revealed.
The average length of retirement for a UK retiree is 19 years, however the study, which questioned 15,000 people in 15 countries, revealed that the savings of pensioners is only likely to last 7 years, this leaves a 12 year ‘shortfall’ in which pensioners will have run out of additional savings.
Of the countries in the study the UK ranked the lowest in regards to the length of time that savings are likely to last, with the length of time left without them being referred to as the ‘shortfall’. The UKs 12 year shortfall came well above the global average of 8 years, with Egypt recording a shortfall half of that of the UK with 6 years, Mexico with 8 years and the USA with 7 years.
Shortfalls of this nature can greatly affect an individual's retirement future. Not only does it limit the amount of leisure activities directly associated, and expected during their retirement, but it can also have grave consequences later in retirement. This is because many find that the later years of retirement are likely to be dominated by medical expenses and care. This looks set to increase as the life expectancy continues to rise irrespective of savings and the ability to support ourselves.
This is a problem faced by the entire global working population as one in five, regardless of geographical location, are not adequately saving for their retirement. However, when this figure is applied to the UK it jumps to one in three.
Furthermore 57% of UK residents, not in full retirement would prioritise saving for a holiday instead of saving for retirement. The study also revealed that 14% of those yet to retire admitted they would dip into their retirement savings to cope with financial burdens such as buying a home or paying for their childrens education.
But whilst acknowledging their inadequate savings, residents of Britain still expect to fully retire at the age of 65.
Christine Foyster, from HSBC, the bank that ran the study said:
"People are living longer, through tougher economic times, but their expectations about their standard of living in retirement remain unchanged. They are putting off the inevitable, which is the reality of significant cuts to their living standards in their twilight years, after their savings run out."
“daunting as the current challenges may seem, the solution is simple: the earlier you start to plan the better prepared you will be.
"For some this may mean beginning to save more, whereas others will choose to work longer. The key is for everyone, regardless of age or income, to make small changes now to ensure they get the retirement they expect."