(Special) - The media these days is full of reports about the Canadians' financial unpreparedness for retirement. Some recent studies show that Canadian Baby Boomers are more than $400,000 short of their individual retirement savings goal and there is a huge gap between how much money they say they will need to retire and how much they are actually saving.
Now a new global report by HSBC based on the opinions of 16,000 people in 15 countries shows Canadians are not alone in this financial predicament.
According to the report, an average of 12 per cent of working age people expect they will never be able to afford to retire. This number is higher in more affluent industrialized countries - 19 per cent in the United Kingdom, 18 per cent in the United States, 17 per cent in Canada and 15 per cent in Australia.
Seventeen per cent of people 55 to 64 expect they will have to continue working indefinitely. Forty-six per cent said they were unable to realize their retirement plans because they have less money to live on than they expected. Thirty eight per cent of retirees said they had not prepared adequately or at all for a comfortable retirement and of this group 14 per cent said they will have to go back to work to cover their financial shortfall.
According to the U.S. Census Bureau, 579 million people around the world are currently retired. That number is expected to triple by 2050.
People generally are living longer, often in better health, and have greater expectations for old age, all of which increases the likelihood that they could outlive our money.
Participants in the HSBC study attributed having a lower than expected income in retirement to insufficient planning, the global economic crisis, unexpected expenses, supporting children, debt, supporting parents, a decline in home values and getting a lower-than-expected inheritance.
"Generating an adequate income in retirement remains a major challenge for most people given the financial conditions created by the global economic downturn," the report says. "With social security systems to become less generous, people will need to rely increasingly on their own retirement savings."
There are several reasons why retirees are finding they don't have enough money for their retirement.
Sixty six per cent saw their income fall on retiring, with 21 per cent saying it fell by more than half.
Living in retirement also is more expensive than many retirees thought. More than half said they continue to spend as much or more than they did before they retired.
Retired people said the best advice they received about retirement planning was to start saving at an early age, start saving a small amount regularly, don't spend what you don't have, buy your home as soon as you can, buy only what you need, and develop a financial plan for the future.
The report has some practical steps towards building a better retirement.
The first is not to rush into retirement. Many retirees now say that they might have been too hasty in giving up paid employment. Nearly two thirds who entered semi-retirement wished they had delayed it further, primarily because they see it as being an important way to keep the body and mind active.
Don't rely on one source of retirement income. On a positive note, "the current generation of retirees has wisely chosen not to generate all of their income from place (and) have been successful in spreading their retirement income sources and the associated risk so that not all their eggs are in one basket," the report says.
Plan your retirement with your family in mind. Family will continue to be a major consideration in retirement planning. While many aspire to travel in retirement, 49 per cent of current workers expect to have some financial responsibilities toward adult children and elderly parents even when they are retired.
And be realistic about your retirement expectations. Many working people assume their income needs will fall when they retire, yet 52 per cent of retirees have seen no reduction in their expenses and 17 per cent have seen an increase.
"Although people are familiar with the concept of increasing life expectancy, the consequent increase in later life of medical and nursing care costs may not be well understood as people still are not doing enough to prepare themselves for these potential costs," the report concludes.
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.
Copyright 2013 Talbot Boggs.