New ways to save as research reveals seven-year retirement gap

New research by Ipsos for HSBC has revealed a seven-year savings gap where, in an average 18-year retirement, working age people worldwide expect to run out of their retirement savings and investments* after just 11 years.

The findings will heighten existing fears over finances in later life. Two thirds (66%) of working age people are already concerned that they will not have enough money in retirement to live on day-to-day and 69% fear they will run out of money altogether. These fears will become a reality when people enter retirement and realise they face a significant savings gap.

However, according to The Future of Retirement A balancing act, pre-retirees are already addressing the situation, planning additional sources of retirement funding from new ways of saving.

While well over half of working age people remain confident in the potential for personal pension schemes (62%) and employer pension schemes (57%) to generate income in retirement, concerns remain that these may not provide enough for a comfortable retirement – prompting many to turn to extra sources of support.

HSBC’s survey of over 16,000 people worldwide found that second properties are now a popular option for additional retirement funding, with 65% of working age people either already owning or planning to own second properties in their home country and 32% overseas.

Interestingly, more unconventional supplementary sources are also coming to the fore; 52% of working age people worldwide plan to rely on returns from gold, jewellery or diamonds to support their retirement, 24% on antiques, 22% on paintings or works of art and 22% on classic cars.

Plans to supplement retirement funding in these less-traditional ways are particularly prolific in Asia and India; nine out of ten working age people in Indonesia (90%) and India (87%) plan to fund their retirement through domestic second properties. In comparison, propensity to buy second properties overseas peaks in the UAE at 62%, followed by 54% in Indonesia and 43% in Malaysia.

The numbers turning to jewellery, diamonds and gold peak at 92% in Indonesia, followed by 86% in India and 76% in Malaysia. In Indonesia and India, 46% and 39% respectively plan to bank on works of art, while plans to fund retirement with fine wine peak at one in three people in Brazil (34%) and Indonesia (33%).

* = excluding pensions

Technical note

The Future of Retirement A balancing act was published in January 2015. It is the tenth in the series and represents the iews of more than 16,000 people in 15 countries and territories: Australia, Brazil, Canada, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, Turkey, United Arab Emirates, United Kingdom and the United States.

The findings are based on an online poll conducted by Ipsos in August and September 2014.