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Rising Inheritance Levels Provide Relief For Retirement Savers

04 December 2013

New York, NY - In an age of historically low interest rates, American savers' dreams of an adequately funded retirement are being bolstered by a rise in the level of inheritances they receive from the current crop of retirees. According to a global study from HSBC - The Future of Retirement, Life after work? one fifth (20%) of legacies left to children by American retirees are expected to exceed $390,000. What's more, Americans are the sixth most generous retirees in the world, leaving an average of around $175,000 to their offspring.

Many people are also not waiting until after death to pass on their wealth to loved ones. Some 35% of working-age people in the United States have already received a significant financial gift or loan from a family member, with a total average value in the region of $24,000. HSBC's research additionally discovered that more U.S. retirees expect to leave an inheritance to their children (56%) than non-retirees expect to receive one (42%).

HSBC's report, which surveyed over 16,000 people in 15 countries, found that Australia has the world's most generous retirees with the average inheritance there expected to be over $500,000. Second and third were Singapore ($370,966) and the United Kingdom ($284,145). Around the globe generally, almost three quarters (69%) of retirees are planning to leave a financial legacy to their family of an average $148,000.

The study reveals that a large number of working age people hope to live off an inheritance after leaving the workforce, with two thirds (66%) saying it would finance their retirement to some extent, and 10% planning to rely solely on this income to fund their retirement.

Retirees in India and Mexico emerge as the most likely to leave a legacy, with 86% and 84% respectively saying they expect to bequeath an inheritance. This compares to just over half of retired people in the USA (56%) and Canada (57%).

Andy Ireland, Head of Premier and Wealth, HSBC Bank USA, N.A., said: "These findings show that many Americans expect to leave an inheritance. However, it's vital that people don't rely on these potential windfalls to fund their retirement. Older people often face unexpected hurdles and may require the money themselves to fund other things such as medical and nursing care in later life.

He added: "While the figures suggest that some people might be surprised by their relatives' financial generosity, this comes with a warning: you cannot predict what may happen between now and receiving an inheritance. The earlier you start preparing, the more financially secure your own retirement is likely to be."

Average inheritance retirees expect to leave, by country:

Country ** % of retirees expecting to leave an inheritance Average (median) value of inheritance retirees expecting to leave (US$)
Australia 69% $501,919
Singapore 70% $370,966
UK 64% $284,145
France 64% $223,699
Taiwan 70% $191,039
USA 56% $176,814
Canada 57% $171,154
Hong Kong 70% $145,943
Brazil 71% $131,761
Mexico 84% $96,347
China 59% $68,422
India 86% $47,775
Malaysia 78% $38,814
AVERAGE 69% $148,205

Notes to editors:

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 latest global report, Life after work?, was written by Cicero Consulting and is the ninth in the series. It is based on an online survey of 16,000 people in 15 countries between July 2012 and April 2013. Since The Future of Retirement programme began in 2005, more than 125,000 people worldwide have been surveyed. For more information about The Future of Retirement, and to view all previous global and country reports, visit www.hsbc.com/retirement.

HSBC Bank USA, National Association (HSBC Bank USA, N.A.), with total assets of $179.9bn as of 30 September 2013 (US GAAP), serves 3 million customers through retail banking and wealth management, commercial banking, private banking, asset management, and global banking and markets segments. It operates more than 240 bank branches throughout the United States. There are over 155 in New York State as well as branches in: California; Connecticut; Delaware; Washington, D.C.; Florida; Maryland; New Jersey; Pennsylvania; Oregon; Virginia; 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. HSBC Bank USA, N.A. is a member of the FDIC.

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,600 offices in 80 countries and territories in Europe, Hong Kong, Rest of Asia-Pacific, North and Latin America, and the Middle East and North Africa. With assets of US$2,723bn at 30 September 2013, HSBC is one of the world's largest banking and financial services organisations.

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. 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 director.

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