UK are worst savers

Posted by Sam Twyford in Credit Crunch on 8 March 2013 - Sam is a Product Manager at checkmyfile

A recent study conducted by HSBC shows that the UK is the worst country in the world at saving for retirement. The figures show that the average retirement in the UK is expected to last 19 years, but the average person is only saving enough to last 7 years.

The global research surveyed 15,000 people in 15 countries around the world, with the UK's 12 year shortfall identified us as the worst pension savers. Malaysia topped the list with its citizens saving 71% of their needed retirement income.

It also found that on average people will run out of their savings just over halfway through their retirement.

Worryingly more than half of the UK working population were not doing enough to prepare for retirement with 42% of respondents expecting their income to come from the government, while 56% are not preparing adequately for later life.

Christine Foyster of HSBC says, "The concept of retirement is evolving all the time, and we know many people aren't prepared. But now we know by just how much. People are living longer, through tougher economic times, but their expectations about their standard of living in retirement remain unchanged. They 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."

According to the Office for National Statistics, there has been a huge drop in the number of active savers in the UK falling from 12.2m in 1967 to 8.2m in 2011, with only 3 out of 10 private sector workers choosing to pay into a retirement scheme.

Although the study highlights the dramatic shortfall, UK residents remain confident and continue to believe that they will retire by the age of 65 regardless of their retirement savings. The new auto-enrolment pension scheme which is gradually being rolled out over the next 5 years will see workers placed into a workplace pension scheme to provide an income stream meaning less people will come up short once retired.

Sam is a Credit Analyst at Checkmyfile, has a degree in Business Studies and is an Associate of the Institute of Credit Management. He can be contacted at sam.twyford@checkmyfile.com

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