58% in US, UK, Australia expect to live a poor or modest life in retirement

| 17 Oct 2017

58% in the US, UK and Australia expect to live a poor or modest life in retirement, despite a quarter of a century of compulsory saving in Australia, and savings schemes in the UK and US designed to provide retirees with funds once they stop work, according to a Actuaries Institute report.

Highly gender based
The survey also found that retirement readiness is highly gender based. It is more common among men than women in all three countries, with 47% of men preparing compared to 34% of women. But the gender gap is highest in Australia at 22%, than either the UK where the gap is 7%, or the US at 15%. Around 70% of people are married when they retire so the gender gap has the largest financial burden on single female retirees.

A third do not plan to retire at all
Many have no idea how long their money will last, and fear outliving their savings. A third do not plan to retire at all.

“Respondents, on average, are least prepared when it comes to knowing how much they need to retire, how long their money will last, and what might happen if they are forced to stop work unexpectedly,” said Actuaries Institute President Jenny Lyon. “Alarmingly, many respondents were also unprepared to retire at all, or believe they can re-enter the workforce if they need to.”

Public policy initiatives identified
The international paper also identified public policy initiatives governments in all three countries must pursue:

  • Better and more education, including around financial literacy and retirement planning;
  • Clear and workable default options for retirement savings; and
  • Sustainable public pensions that will remain an essential part of retirement funding for many people.

It also found:

  • Australia and the UK have roughly equal percentages of gross domestic product invested in private pension funds: 102% and 100% respectively, compared with 83% for the US; and
  • In the UK, 43% of the working-age population is invested in a voluntary private pension, in the US the number is 47%, but participation is much lower in Australia at 20%, where superannuation contributions are compulsory.

The “Retirement Readiness: A Comparative Analysis of Australia, the United Kingdom and the United States" report is based on a survey of 2,953 working men and women from 18 to 64-year-olds across the three countries. Prepared by the Actuaries Institute Australia, the American Academy of Actuaries and the United Kingdom’s Institute and Faculty of Actuaries, the “Retirement Readiness” paper is a comparative analysis of what people expect after they stop full-time work.

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