A new era in retirement of the unprepared is dawning, as the West’s golden age of pensions comes to an end, according to a report from HSBC Insurance Holdings, “The Future of Retirement: The Power of Planning.”
Two-thirds of people around the world fear they won’t be able to cope in retirement and expect to face financial hardship, and 20% of working age people in America don’t know what their main source of income in retirement will be.
“A significant shift in retirement wealth, expectations and outlook is taking place around the world,” said Patrick Cozza, regional head of insurance at HSBC North America. “There is a large ‘preparedness gap’ between retirement hopes and actual plans. However, future retirees can bridge this gap with financial planning and achieve a ‘planning premium’ to reach their financial goals and once again associate retirement with freedom, happiness, satisfaction and hope.”
In the U.S., only 36% are actively planning financially for their retirement, and 64% said they are concerned that they have not saved enough for retirement. Fifty-nine percent expect to be worse off than their parents in retirement, citing an uncertain labor market and the decline in value of Social Security as two of the key reasons.
On a global average, HSBC found, those who plan save 2.5 times more towards retirement than those who do not and these planners enjoy 39% more retirement wealth than the global average.