HSBC study reveals unrealistic pension dreams

Nearly half of all people who would like to retire in the next five years are unable to make their dream a reality due to circumstances, including debts, child dependents and lack of savings. That’s according to a new study by HSBC that, as Acumen explains, demonstrates unrealistic expectations among some working age savers.

“There are three kinds of lies: lies, damned lies, and statistics,” so the famous saying goes. A recent story that caught our eye is a perfect example of how statistics can be misleading and, in this case, perhaps indicative of a wider misunderstanding.

The figures in question come form banking giants HSBC. According to their research, 75% of people in the UK aged 45 and over dream about retiring in the next five years. Yes, well, don’t we all?! However, the not-so-shocking insights continue, as 45% of those respondents say they can’t and of those a resounding 87% put that down to financial constraints, such as children or debts.

Workers dream of greater freedom

Working men were reported to be more likely than women to face at least one of these barriers. While nearly a quarter (23%) of hopeful retirees aged 45 and over said their work was having a negative impact on their health.

Among the main reasons for wanting to retire cited by prospective pensioners were wanting the freedom to travel or pursue other interests (58%), the chance to spend more time with family (35%), joining their partner’s retirement plans (14%) and pursuing another career or volunteering (10%).

Brits more likely to blame circumstances

Perhaps rather tellingly, Brits are more likely than the global average to blame their personal circumstances for blocking their retirement plans, according to the report.

Across more than 18,000 people surveyed across 17 countries – including Australia, Canada, France, China and the United States – a more realistic 38% of over-45s said their circumstances impeded their dream of retiring in the next five years.

Worryingly, the proportion of people within the UK who predict they may never be able to fully retire has increased in the last year, the Future of Retirement report found. Around 12% of British respondents expect to never fully retire, up from 10% a year ago. Globally, around 18% of pre-retirees predicted that they will never be able to fully retire.

A false picture of pension forecasts

According to Angela Maher, Managing Director at Acumen, these kinds of surveys promote a false picture of pension forecasts and encourage unrealistic expectations amongst working age adults in the UK.

“On average, a British man of 50 now can expect to live to age 79 and a woman of the same age can expect to live to 83. So your 45-year-old man retiring at 50 will have only paid into his pension for 25 years,” says Angela.

Not only does he have to find the money to live on until he gets to 55, that fund then has to stretch out for another 24 years or more. It’s not surprising to find that he’s not saved enough to retire. As the Americans say: do the math!

To discuss your financial plans with one of our dedicated team, please contact us today on 0151 520 4353 or email info@acumenfinancial.co.uk.