Britain’s heading for retirement nightmare

Brits are set to be floored in retirement by a combination of demographic, individual and financial elements that will see their retirement plans derailed, according to a global report from HSBC Insurance.

HSBC is urging Britons to prepare properly review their priorities and planning or they will struggle to make ends meet when they come to retire.

The fifth annual Future of Retirement study, It’s Time to Prepare, which questioned 15,000 people in 15 countries, found that globally people’s short-term survival strategies in the midst of recession are creating a serious long-term pensions ‘downturn deficit’, meaning that older people could find themselves with no savings or investments to see them through retirement. The report authors argue that despite a widespread awareness that people are living longer, there is a continuing lack of pensions planning, which is being exacerbated by poor levels of financial understanding, education and access to advice.

The report concluded that people are more concerned with protecting their pets and possessions in the short-term than ensuring they can look forward to a secure life after work. The report identified a ‘preparedness gap’ in people’s pensions, with three quarters of adults in the UK reporting that they do not feel fully prepared for their retirement. Further, only 38% feel they fully understand their long-term finances and 13% have done no retirement planning at all.

Stephen Green, Group Chairman of HSBC, said:

“A perfect storm is confronting pensions planning, created by an ageing population, falling pension funds values, a drop in state and employer contributions and an economic downturn which is forcing people to make tough financial choices.”

“The ‘preparedness gap’ reveals that families in the UK need greater support and guidance to effectively handle their finances, not simply in schools and colleges but through ‘trusted advisers’ providing professional financial guidance.”

“If people prepare adequately for the long-term an extended later life can present a golden opportunity for many – but now is the time for people to seriously consider boosting their pensions contributions to improve their prospects of a comfortable retirement. The cost of procrastination is likely to be high.”