British pensioners are running out of money a decade too early

17 June 2019
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British pensioners will run out of money roughly a decade before they die, a new report by the World Economic Forum has warned.

The authors of the report took the average savings at retirement for countries around the world and calculated how long that would last based on an assumed reduced income of 70% of final pay.

They found that male British pensioners were expected to run of money 10.3 years before they died, while female pensioners can expect to outlive their pension pots by 12.6 years.

The figures do not factor in the state pension, although for younger people in particular, this should not be relied on. Last year, the Government’s Actuary Department (GAD) warned that National Insurance contributions need to rise for the state pension to exist in its present form, or else it will be exhausted by 2033.

The World Economic Forum report warned that the so-called retirement savings gap is on the rise across the world, being driven by increases in life expectancy.

While Britain’s retirement savings gap is relatively high, it is not the world’s worst offender. In Japan, women are expected to outlive their savings retirement by almost 20 years, while for men it is 15 years.

Female pensioners in Australia had a slightly higher deficit than in the UK, while the deficit for men was slightly lower.

Of the countries given, the United States had the lowest figures, with the retirement savings deficit standing at 8.3 years for men and 10.9 for women.

The report notes that the retirement savings gap globally is set to skyrocket within a few decades. According to its research, the retirement savings gap in 2015 stood at $70 trillion globally. That, however, is expected to grow by 5% per year between 2015 and 2020, leading to a gap of $400 trillion by 2050.

In the UK, the assumed growth per year of the pension savings gap is slightly lower than the global average, at 4%. Between 2015 and 2050, the retirement savings gap is expected to grow from 8 trillion to 33 trillion.

China has the highest pension savings gap growth rate, at 7%.

This article first appeared on our sister website Money Observer

Comments

In reply to by anonymous_stub (not verified)

NI contributions should rise to cover the extra £39 a week people who retire now get above those who retired a few years back, we paid in the same for 50 years and get £39 a week less.

In reply to by anonymous_stub (not verified)

Unfortunately, whilst much is done to encourage people to enroll in pension schemes, it is not high on many people's agendas. When first entering the workplace, many young people have student debts to worry about, as well as saving for a deposit on a home - not to mention buying a car or nice holidays. Any decent job will demand automatic enrolment into a company pension scheme, so those employees should be adequately covered for their eventual pension needs. However, some will have a different outlook and might not seek the security of a traditional employment career, perhaps entering the gig economy or starting up their own business. Even those who successfully run their own businesses very seldom invest in a future pension scheme. Getting started takes all they can spare and growth to expand takes even more, so their own pension pot is often not even considered until much later, when time to invest for a pension is a bit late.Whatever motivates people into their life changing decision making, there is one thing they really need to remember - the only person who you should rely on for your own current and future wellbeing is yourself. Your employment and income might seem difficult enough for your current needs, but retirement is always closer than you think and is likely to last longer than you might have thought. So it needs to be factored in now and planning for it is your responsibility. Putting it off or thinking that someone else will handle it is not an option.

In reply to by anonymous_stub (not verified)

One concnern of mine - and I have now been an OAP for 10 years - is how do my indexed pension receipts match inflation in my spending basket? Over time, do I fall further behind or not?

In reply to by anonymous_stub (not verified)

Headline says British pensioners "are" running out of money, strapline says British pensioners "will" run out of money. Big difference, which is it?

Pension planning

Most pension predictions seem based on the individual ; there are still a few of us living as couples / married !!! 2 x £8.5 k = 17 k pa (state pension) , as a starting figure ...

Pension “scare stories”

Self interest of pension companies driving the agenda of pensioners “running out of money too early “ Ridiculous estimates of £500 k pension pots required .... instead of “ how much do you need to retire on....” maybe the mantra could be “ how little you can retire on and have a good life” .....

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