The average UK retiree will run out of savings just over a third of the way through their retirement, according to a report published by HSBC today.
The bank's The future of retirement: a new reality study found that the average retirement in the UK is expected to last 19 years, but peoples' savings will, on average, be used up after 37% of this period. This leaves a shortfall of 12 years - the longest among the 15 countries included in the study.
For the countries covered by the research as a whole, HSBC found the average retirement was expected to last for 18 years, with retirement savings running out after, on average, 56% of this time - leaving an eight year shortfall in savings. Respondents in Malaysia were best prepared for retirement, with sufficient savings to cover 71% of their retirement.
HSBC noted that shortfalls in retirement savings were only likely to worsen as life expectancy continues to increase worldwide and people fail to realise how much they need to save to maintain their pre-retirement living standards when they stop working.
Almost two-thirds (62%) of UK respondents expecting a shortfall in retirement savings thought this would result in them struggling with food and fuel costs, while 57% expected to have to cut down on spending as a result of their lack of cash.
Christine Foyster, head of wealth development for HSBC UK, said: '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.'
Almost one in five (19%) of the people surveyed by HSBC worldwide were not saving at all for their retirement. In the UK, this figure rose to more than a third (34%).
The survey found that people were aware of their inadequate savings, with 63% of UK respondents identifying financial hardship as a major fear about living in retirement and 31% worrying they will have to work longer than they want to.
But despite this, over half (57%) of UK respondents said they would prioritise saving for a holiday over putting money away for their retirement - compared to 43% globally.
Foyster stressed that the 'simple' solution to being adequately prepared for retirement was to begin planning as early as possible. 'For some this may mean beginning to save more, whereas others will choose to work longer. The key is for everyone, regardless of age or income, to make small changes now to ensure they get the retirement they expect,' she explained.