A HSBC survey, ‘The Future of Retirement', revealed that one in five Britons believe they will never be able to afford to fully retire from paid employment.
Of those surveyed who thought they would stop full-time work, 33% believed they would have to continue with part-time work. Among 25-34 year olds the figure was notably higher at 40%. The report also found a large discrepancy between aspirations and reality: respondents expected retirement to last for nineteen years, but realistically their average savings would only last seven.
Despite the introduction of auto-enrolment into workplace pensions, the phasing out of final salary plans has meant that, in the future, pensions are more likely to be determined by how much individuals contribute, investment returns and interest rates. It is key that younger workers begin to save for their futures now. Hargreaves Lansdown's figures show that automatic enrolment contribution rates are unlikely to fund the retirement lifestyles people expect to enjoy. And with life expectancies rising, this adds to the danger that people are wildly underestimating how much they need to save. Worryingly, HSBC's survey also found that 58% of respondents would prioritise saving for a holiday over saving for retirement - and yet two of the most popular retirement aspirations were to travel and take frequent breaks.
The report concluded with some practical steps for a better retirement, including: be realistic about your retirement needs - outgoings don't always reduce and could potentially increase, e.g. medical and nursing costs. Retirement savers are also cautioned to diversify their sources of income so that their eggs are not all in one basket.
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