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New Retirement Era Dawns With Many Unprepared

1 June 2011

HSBC's The Future of Retirement report reveals two-thirds of people around the world fear they won't cope in retirement - but are still failing to plan ahead.

New York, NY - A new era in retirement is dawning as the West's golden age of pensions comes to an end and the first generation of 'prosperous pensioners' appears in the world's emerging economies. This is a key finding from a new report by HSBC Insurance Holdings Ltd. (HSBC), which reveals how the traditional polarities of financial provision around the world are reversing under global economic and social change.

HSBC's The Future of Retirement: The power of planning found that people across the West expect to be worse off than their parents in retirement and fear financial hardship. In fact, one in five working age people in America don't know what their main source of income in retirement will be. Conversely, in emerging economies in the East, rising incomes and living standards are merging with a culture of saving and self-reliance to create a generation of prepared retirement optimists.

Patrick Cozza, Regional Head of Insurance, HSBC North America, said: "A significant shift in retirement wealth, expectations and outlook is taking place around the world. 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' - reaching their financial goals and once again associating retirement with freedom, happiness, satisfaction and hope."

In countries such as the U.S., U.K. and France, people have until recently enjoyed generous state and company pensions, job stability and rising stock and property markets for many years. But with people living longer and governments and companies unable to support the costs of expensive pension schemes, individuals are having to take much greater personal responsibility for their retirement planning.

Yet, too few are doing so: 65 percent of Americans believe that financial planning is important to a happy retirement - but only 36 percent are actively planning financially for their retirement. On a global average, planners save 2.5 times more towards retirement than those without a plan. As a result they enjoy 39 percent more in retirement wealth than the global average.

Key findings of the U.S. report include:

  • 54 percent of Americans see retirement as an age of freedom. Married couples are the most confident of this. Even so, 49 percent of respondents did not feel financially prepared for retirement.
  • 64 percent of respondents are concerned that they have not saved enough for retirement, with 59 percent expecting to be worse off than their parents in retirement - due to the uncertain labor market and the decline in value of Social Security.
  • Banks and independent financial advisers are the top two sources of advice in the U.S.

Additional global findings include:

The geographical differences between those who plan for retirement and those who do not are stark:

  • In Malaysia, 84 percent of respondents have a plan, followed by 76 percent in China (both are countries with a tradition of individual and family financial responsibility). However, in France (where the state is the historic provider in retirement and where personal financial planning is a relative rarity) just 30 percent of people have a plan in place for their own and their family's future.
  • Globally, 32 percent of respondents expect to face financial hardship in retirement. However, in line with the East's generally more optimistic stance, this falls to 17 percent in China.
  • In fast-developing economies people tend to be optimistic about their retirement: 69 percent in Malaysia associate retirement with freedom, while this falls to 28 percent in Poland.

Many people in the West blame their expectation of being worse off in retirement than their parents on the decline of traditional pension schemes:

  • In the U.K., 57 percent of respondents say company pensions are becoming less generous, as do 43 percent in the U.S. - compared to just 17 percent in South Korea and 19 percent in Malaysia.

The Future of Retirement is a long-running, world-leading study into global retirement and ageing issues which helps HSBC fully understand the trends and consequences of ageing and retirement. The latest report, The power of planning, questioned over 17,000 people in 17 emerging and developed countries about retirement and financial planning.

Note to editors

1. European Commission Green Paper, COM(2010)365 final, 2010

  • The countries surveyed for The power of planning were: Argentina, Brazil, Canada, China, France, Hong Kong, India, Malaysia, Mexico, Poland, Saudi Arabia, Singapore, South Korea, Taiwan, UAE, UK, and the US. The report surveyed 17,849 people of working age (mostly between 30 and 60 years) in 17 countries. The research was conducted online in December 2010 and some survey data was collected on the basis of both a household and individual basis.
The Future of Retirement: The power of planning

HSBC Bank's The Future of Retirement programme 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 2011 report, The power of planning, is the sixth in the series and is based on interviews with more than 17,000 people in 17 countries. Since The Future of Retirement programme began in 2005, more than 110,000 people worldwide have been surveyed.

The programme has positioned HSBC Bank at the forefront of retirement thought leadership, and has raised awareness of HSBC Bank as a leader in the growing retirement services market. The report findings help HSBC Bank to understand and meet the needs of its 95 million customers worldwide.

For further information on this and previous reports, visit www.hsbc.com/futureofretirement

The HSBC Group

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 7,500 offices in 87 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of US$2,598bn at 31 March 2011, HSBC is one of the world's largest banking and financial services organisations. HSBC is marketed worldwide as 'the world's local bank'. Visit: www.hsbc.com

About HSBC Bank USA, N.A.

HSBC Bank USA, National Association operates more than 470 bank branches throughout the United States. There are over 370 in New York state as well as branches in Connecticut, Washington, D.C., Florida, New Jersey, Pennsylvania, Maryland, Virginia, California, Delaware, Illinois, Oregon and Washington State. HSBC Bank USA, N.A. is the principal subsidiary of HSBC USA Inc., an indirect, wholly-owned subsidiary of HSBC North America Holdings Inc., one of the nation's largest bank holding companies by assets. HSBC Bank USA, N.A. is a member of the FDIC.

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