The average Briton will have to contend without any savings for the final 12 years of life during retirement, a report warns today.
We spend our working lives looking forward to an old age in which we can happily indulge in holidays and hobbies – but now it seems the typical nest egg savings put aside will vanish just seven years after retirement.
And the research by HSBC revealed that people in the UK are less prepared for retirement that any of 14 other countries which took part in the poll.
The average Briton wants to retire ‘punctually’ at 65 and believes they would need about £22,500 a year to live comfortably. This could come from State pension, company pension, income from savings and dividends from investments. But the report warns that savings will typically run out after seven years.
For those retiring at 65, their nest egg will have shrunk to zero by the age of 72. However, average life expectancy is 84 – leaving 12 years after the nest egg is gone.
But for many the gap will be even longer. The most common age of death in England and Wales is 85 for men and 89 for women, according to the Office for National Statistics.
It means the typical man will be left to survive without any savings for 13 years – and the typical woman for 17 years.
When asked how they would like to spend their retirement, common answers were ‘frequent’ holidays, home improvements and learning new hobbies. But a desperate lack of cash is likely to sabotage such plans for those who are left with just the income from their pension.
Yet few of working age are prepared to make the necessary sacrifice for the future. Just 32 per cent said they would prioritise saving for retirement over taking a holiday if they had to make the choice one year.
The gap is ‘the worst identified by the international study’, which also looked at Australia, the US, Canada, Singapore and China among other countries. A typical pensioner around the world will run out of savings far later than in Britain – ‘just over halfway’ through retirement.
Christine Foyster of HSBC said: ‘People are putting off the inevitable, which is the reality of significant cuts to their living standards in their twilight years after their savings run out.’
Last night, pensions minister Steve Webb said the report was ‘a startling reminder of the problems we are facing by failing to save for our retirement’.
Joanne Segars, chief executive of the National Association of Pension Funds, said: ‘The UK needs to do more to face up to saving for its old age. ‘For millions of people, that will mean working longer or saving more, or both. Too many people will retire only to find they have to significantly downgrade their lifestyle because they do not have enough savings.’
Source: Daily Mail
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