Retirees face eight years of hardship after savings run out

New research from HSBC highlights both global and Canadian retirement shortfall

VANCOUVER, Feb. 20, 2013 /CNW/ - Tomorrow's retirees are sleepwalking towards a drastic fall in their standard of living in their final eight years of retirement due to highly inadequate savings plans, according to research from HSBC.

HSBC's recent global study, The Future of Retirement: A new reality, based on a survey of over 15,000 consumers in 15 markets around the world, found that, on average, people expect to run out of retirement savings just over half-way into their retirement.

The average retirement is expected to last 18 years globally and 19 years in Canada, while average retirement savings are expected to last for just 10 years globally and 11 years in Canada.  This would leave people potentially unprepared for any additional living expenses in later retirement, such as funding long-term care.

Currently 56% of working respondents globally and 55% of Canadian respondents say they are not preparing adequately for a comfortable retirement, with 19% of global respondents and 23% of Canadian respondents not preparing at all. In fact, 42% of Canadian respondents have never saved for retirement, including 47% of 55-64 year olds.

Betty Miao, Head of Retail Banking and Wealth Management, HSBC Bank Canada, said: "Higher debt levels are pushing Canadians to prioritise immediate needs and wants above longer term financial health. This focus on the short-term will result in many retirees being forced to cut back in later life unless they take action to make up the shortfall while they can."

HSBC predicts that the situation is only likely to worsen as life expectancy continues to rise around the world.

Financial concerns were cited by those yet to retire as their greatest fear about living in retirement, with 57% globally and 55% of Canadian respondents saying they feared financial hardship, and 46% globally and 34% of Canadian respondents worrying that they would be unable to afford good healthcare provision.  Yet in spite of this, when asked to choose, almost half (43% globally and 41% of Canadian respondents) of those not yet fully retired are willing to prioritise saving to go on holiday over saving for their retirement. This suggests that for many, short-term financial needs take precedent over longer term financial priorities.

Households in Canada are struggling to meet their day-to-day expenses - with 60% claiming that daily expenses prevent them from saving. Only 15% of respondents are optimistic that they will make up the shortfall once the economy improves.

The study also showed how vulnerable retirement savings are to being raided to cover shorter term needs, with 29% globally and 25% of Canadian respondents yet to retire admitting they would dip into their retirement pot to cope with life events such as buying a home or paying for children's education.

Simon Williams, Group Head of Wealth Management, HSBC, said: "People throughout history have faced the question of how to provide for the future, and today's savers are no exception.  Yet as daunting as the current challenges may seem, the solution is very 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 a plan to help them get the retirement they expect."

Retirement savings shortfall by country

    Length of
Time when
expected to
run out
(% of
Ranking  Global 18 10 8 56%
1 UK 19 7 12 37%
2 Egypt 11 5 6 45%
3 France 19 9 10 47%
4 China 20 10 10 50%
5 Taiwan 18 9 9 50%
6 Brazil 23 12 11 52%
7 Australia 21 11 10 52%
8 Mexico 17 9 8 53%
9 Singapore 17 9 8 53%
10 Canada 19 11 8 58%
11 UAE 15 9 6 60%
12 Hong Kong 17 11 6 65%
13 USA 21 14 7 67%
14 India 15 10 5 67%
15 Malaysia 17 12 5 71%

HSBC's research identified five actions that individuals can take to improve
their financial well-being in retirement.

Action 1: Get real about your retirement needs
By thinking realistically about your future aspirations and needs, from foreign travel to
healthcare costs, you will be able to better understand how much income you will need in
retirement and how to best prepare for all the financial risks associated with growing

Action 2: Put your saving priorities in order
Work out a realistic budget that works for you and make sure that your long-term
financial planning, including the need to save for retirement, isn't overlooked against
what might seem like more pressing financial needs. Ring-fencing even a small amount
of monthly income towards retirement planning can help to make a major difference in
the future.

Action 3: Be aware of how major life events affect saving for retirement
You never know when a life event may impact your savings, so where possible, you need
to ensure that you have access to some emergency savings and investments as well as
appropriate insurance to deal with periods of unemployment and long-term illness which
may prevent you from working.

Action 4: Make a plan for the future
Any type of financial planning for retirement, including informal ways such as using
online planning tools or 'to-do' lists, is a good starting point. Eventually you should seek
to draw up a detailed written plan for the future, which should be reviewed regularly.

Action 5: Use professional advice to improve your savings position
Reviewing your savings situation and retirement potential with a professional financial
adviser now can help to ensure that all your future retirement needs are identified and that
comprehensive plans are put in place.


Notes to Editors:

1.   HSBC's The Future of Retirement program is a world-leading independent study into global
retirement trends. It provides authoritative insights into the key issues associated with ageing
populations and increasing life expectancy around the world. The latest global report, A new
reality, is the eighth in the series and is based on an online survey of 15,866 people in 15
countries. Since The Future of Retirement programme began in 2005, more than 125,000
people worldwide have been surveyed.
2.   HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London.
The Group serves customers worldwide from around 6,900 offices in over 80 countries and
territories in Europe, the Asia-Pacific region, North and Latin America, the Middle East and
Africa. HSBC Bank Canada, a subsidiary of HSBC Holdings plc, is the leading international
bank in Canada.  With assets of US$2,721bn at 30 September 2012, the HSBC Group is
one of the world's largest banking and financial services organisations.
3.   For more information about The Future of Retirement, and to view all previous global and
country reports, visit
4.   Cicero Consulting is a leading consultancy firm serving the banking, insurance and asset
management sector, Cicero specialises in public policy consulting as well as global thought
leadership and independent market research. Cicero was established in 2001 and now
operates from offices in London, Brussels, Washington and Singapore. Visit
5.   As a market leader in pensions and retirement research, Cicero designed and analysed the
research and wrote this report, with Mark Twigg as author and Paul Middleton as research

SOURCE: HSBC Bank Canada

For further information:

Media enquiries:

Sharon Wilks
Assistant Vice President, Public Affairs
HSBC Bank Canada

Aurora Bonin
Senior Manager, Public Affairs
HSBC Bank Canada


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