Sunday, November 24, 2013

HSBC report: The future of retirement

HSBC did a study on global retirement trends recently. The report compares experience of recent retirees with the expectations of those still working, revealing some important lessons for future retirees. It explores the transition into retirement, the pattern of income, spending and saving in retirement, leaving a legacy and how retirement hopes and aspirations match up to the reality. 

I will share the key findings of the report here. If you are interested, the full report is available at

Key Findings
  • One-in-six (17%) people who are not fully retired expect they will never be able to afford to retire from all paid employment. 
  •  Working age people expect to retire on average at 60, the same as their parents. 
  • One-in-six (17%) of 55-64 year olds have semi-retired, and over half (58%) of 25-34 year olds expect to do so. 
  • Of the retirees who have been unable to achieve all their retirement aspirations, nearly two-fifths (38%) have taken up other interests instead, whilst over a quarter (26%) blame health reasons. 
  • Encouragingly, nine out of ten (88%) of today’s retirees say their preparations for retirement turned out to be at least adequate. 
  • When retirees were asked about the best financial advice they have ever received, the most popular answer was ‘Start saving at an early age’ (chosen by 39% of retirees), followed by ‘Start saving a small amount regularly’ (33%) and ‘Develop a financial plan for the future’ (31%). 
  • The majority of those not fully retired (64%) have never received a significant financial gift or loan from parents or relatives. Nearly one third of working age people who have received such a gift or loan used it to help with education (31%) and over one quarter used it for getting married (27%). 
  • Inheritance expectations differ between retirees and working age people: over two-thirds (70%) of retirees expect to leave an inheritance, whereas one-third (34%) of those not fully retired expect to receive one. 
  • Entering retirement was accompanied by a fall in income for only a minority of retirees, and 66% say their retirement outgoings are the same or greater than before. 
  • Cash is the source of over a quarter (29%) of retirement income, with the state pension (21%) and investment income (18%) also important.

The report also mentioned about "transiting to retirement" which is to move from working full-time into semi-retirement before retiring fully. The reasons for choosing semi-retirement varies from positive reasons (e.g. keeping active, enjoy working) to more negative reasons (e.g. cannot afford to retire full time, still clearing debts). I do feel that the concept of semi-retirement is an interesting. It allows one to transit to full retirement rather than moving from working full time to retirement directly. Some may not be accustomed to the changes if they were to move to full retirement immediately.

The report also made some suggested actions which may help in our retirement planning.

If you are interested to read more into this report, you can visit HSBC's link provided. The report provide more statistics in other areas like
  • Retirement aspirations versus reality
  • Leaving a legacy
  • Income, spending and saving in retirement

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