The working generation today is under more pressure than ever to save for their retirement, and people are now expecting to save for seven years longer than their predecessors for old age, a new research from HSBC shows.
According to the report entitled Generations and journeys under HSBC’s Future of Retirement series, the gap is the most prominent in China, where people expect to save for 14 years longer than the previous generation. In Asia Pacific, Australia takes the lead with 11 years, followed by Hong Kong (ten years), Singapore (nine years) and Taiwan (eight years), while Indonesia is the only country where the working-age population is expecting to save for the same length of time as current retirees.
The survey gathered feedback from 18,207 people across 17 countries, based on a nationally representative survey of people of working age – 25 years old and above – and those in retirement.
The report also found that the working generation today are beginning to save for retirement five years earlier – at age 30 – and are expecting to retire two years later – at age 60 – after saving for an average period of 30 years. This is compared to the current generation of retirees, who only began saving for retirement at age 35 and retired at age 58, having saved for an average period of 23 years.
Despite beginning to save for retirement earlier, many of those surveyed felt they were not saving enough, with more than one in three (38%) respondents wishing that they had started saving earlier, and 28% saying they should have set aside a larger portion of their income for retirement savings. The report also revealed that nearly a quarter (24%) of those surveyed have yet to save for their retirement, including 12% of those aged 60 and above.
Alternative funding for retirement
Based on the HSBC survey, 30% continue to rely on state pensions or social security to fund their retirement. However, due to longer life expectancies and the diminishing state support in most countries, the working generation is looking at different approaches such as drawing on cash savings or deposits (42%), earning income from continuing to work to some extent (29%), and drawing from personal pension schemes (23%) to help fund their retirement.
An increasing number of people are also looking at using property as a form of supplementary income in retirement, with over one in ten (12%) working-age respondents saying that downsizing and/or selling a property would help in funding their retirement, a trend that is the most prevalent in Australia (26%) and the UK (22%).
This compares to just 6% of existing retirees globally who are using income from the downsizing or sale of a property to help fund their retirement, according to the HSBC report.
Over in Asia and the Middle East, pre-retirees continue to expect support from their families to help fund their retirement, a situation that applies particularly to India (15%), Singapore (15%), Hong Kong (14%) and the UAE (14%). Globally, nearly one in ten (9%) working-age respondents believe that financial support from their children would help their retirement funding.
Asia Asset Management
18th July 2016