Pensioners face long-term 'financial hangover' from economic downturn

Millions of workers across the world could face retirement with diminished savings because of the long-term impact of the global economic downturn, according to HSBC.

The bank, which surveyed 16,000 people worldwide, found that two in five working age people (40%) stopped or reduced their retirement savings during the downturn – whether through investments (25%), cash deposits (24%) or employer or personal pension schemes (19%).

"While the future health of the global economy still hangs in the balance, it seems that an as-yet unrealised impact of the past decade is still to come," said Charlie Nunn, group head of wealth management at HSBC.

"It is worrying for the many people who have just about weathered the storm, to think that this financial hangover could persist – but our research shows that the cumulative effect of lost retirement savings and increased debt is going to be felt by people for many decades to come.

"There is no quick-fix solution – but the key for people everywhere is to focus on finding the means to save a little for their future, now."

The research also revealed that for 22% of working age people, debt repayment and slipping into severe financial difficulties have significantly impacted their ability to save for retirement.

The report found that these pre-retirees also blame the impact of becoming unemployed (26%) or a significant drop in earnings (22%) for preventing them from saving enough.

The long-term financial gloom is felt across the world, with nearly a quarter (23%) of working age people expecting their standard of living in retirement to be worse than it is today.

Two thirds (66%) of pre-retirees worldwide are concerned about not having enough money to live on day-to-day in retirement, rising to 88% in Malaysia, 83% in Hong Kong and 81% in Brazil. Women are more concerned than men (71% vs 62%).

One in 10 (10%, rising to 16% in Australia) go so far as to predict that they will never be able to fully retire from paid employment.

Things are set to worsen. Over two fifths (45%) of working age people globally (rising to 62% in France and 58% in Singapore) say that the cost of living today is increasing faster than their income, and 28% around the world (47% in France) say they are less able to save money today than they were just one year ago.