U.S. Retirees Face Seven Years of Pain as Retirement Savings Run Out

  U.S. Retirees Face Seven Years of Pain as Retirement Savings Run Out

Business Wire

NEW YORK -- February 20, 2013

Many Americans  are facing a significant fall in their living standards during
the final seven years of retirement due to inadequately funded long-term
savings, according to a new piece of research released today from HSBC Group.

‘The Future of Retirement: A New Reality^1’, based on a survey of over 15,000
consumers in 15 global markets, finds that Americans will on average run out
of all funds beyond their state and occupational pensions some 14 years into
retirement, thus leaving them potentially unprepared for additional living
expenses in later retirement, such as funding long-term care.

The report also concludes that the average length of retirement
internationally is now 18 years while the average retirement savings is
expected to last for just ten. It predicts the situation is only likely to
worsen as life expectancy continues to rise around the world.

Andrew Ireland, EVP, Retail Banking and Wealth Management, HSBC Bank USA,
N.A., said: “The concept of retirement is evolving all the time, and we knew
that the U.S. and the rest of the world is not prepared - but now we know by
just how much.”

“People are living longer, through tougher economic times, but expectations
about their standard of living in retirement remain unchanged. As a result,
millions of people around the world are facing years of hardship after their
savings run out.”

According to the study, currently 56% of the world’s working population is not
preparing adequately for a comfortable retirement, with 1 in 5 (19%) saving
nothing at all.

Financial concerns were cited by those yet to retire as their greatest fear
about living in retirement, with 57% saying they feared financial hardship,
and 46% worrying that they would be unable to afford good healthcare
provision. Yet in spite of this, when asked to choose, almost half (43%) of
those not yet fully retired are willing to prioritize saving for going on
holiday over saving for their retirement.

The study also showed how vulnerable retirement savings are to being raided to
cover shorter term needs, with almost a third of those yet to retire (29%)
admitting they would dip into their retirement pot to cope with life events
such as buying a home or paying for children’s education.

Andrew Ireland continued: “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.”

Savings shortfall by countries surveyed:

                 Median       Median time      Total savings   Time with
             length of   before savings  shortfall      savings in as a
                 retirement   run out          (years)         % of total
                 (years)      (years)                          retirement
    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%

Note 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 aging populations and increasing life
expectancy around the world. The latest Future of Retirement campaign is the
seventh in the series and is based on interviews with 15,866 people in 15
countries. Since the Future of Retirement program began in 2005, more than
125,000 people world-wide have been surveyed. Visit:
http://www.hsbc.com/1/2/retirement/future-of-retirement

HSBC Bank USA, National Association, with total assets of $196bn as of 30
September 2012 (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 250 bank
branches throughout the United States. There are over 165 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.

Cicero Consulting

Aleading consultancy firm serving the banking, insurance and asset management
sector, Cicerospecializes 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 analyzed the research and wrote this report, with Mark Twigg as
author and Paul Middleton as research director. Visit:www.cicero-group.com

Contact:

Media inquiries
HSBC – North America
Neil Brazil, 847-208-4319
neil.brazil@us.hsbc.com
 
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