Global Retirement Trends in 2020
Retirement is a key stage of life that we all go through. Typically an indicator that we’re entering later life, retirement is a time to sit back and relax; enjoying family, friends and the rewards of your working life.
Because of advancements in technology and medicine, it’s expected that by 2050, one in six people in the world will be over the age 65 (16%), up from one in 11 in 2019 (9%). People are living longer and the number of those aged 80 years or over is projected to triple, from 143 million in 2019 to 426 million by 2050.
Retirement has always been something that needs to be considered but the retirement period itself is becoming increasingly longer, meaning people need more money to sustain their lifestyle. As part of our look at retirement planning, we’re examining the global retirement trends that are taking form in some select countries around the world.
For example, the average working age person expects to retire at 61 and expects to live until 81, meaning they’d need to account for at least 20 years in retirement.
At the same time, when we look at how different generations view retirement there isn’t much variation. Millennials across the globe expect to retire at age 56, Generation X at 59 and Baby Boomers at 62. Millennials expect to live to age 72, while Generation X expect to live to 74 and Baby Boomers to 80, resulting in expected retirements of 16, 15 and 18 years respectively.
But how do these trends differ from country to country? We’ve broken down the retirement data from several very different markets to build the Global Retirement Trends in 2020.
Retirement in the UK is typically split between the state pension and various personal pension schemes. The state pension rate is £168 per week, plus anything which you’ve saved through personal savings or workplace pension schemes.
You can usually start withdrawing money from a pension scheme at 55, significantly before the state pension age which has risen over the last 10 years and sits at 66 at the time of writing.
With this in mind, many UK workers are now looking for alternative methods to fund potential early retirement. Property is the top choice, with 47% of working age people believing it delivers the best returns according to HSBC. However, there’s a disparity between the aspiration and reality – only 15% of UK workers actually have or plan to have property in their retirement funding.
Instead, 61% expect a state pension or social security to be the main source of funding. This could be explained by the UK’s very-low risk appetite. Only 15% of people are willing to make an investment with an element of risk.
UK Retirement Trends
In terms of generational attitudes to retirement, much like the worldwide statistics, the UK has a very small amount of variation. Millennials expect to retire at 65, while Generation X and Baby Boomers expect to retire at 64 and 65 respectively.
On average, only 23% of the UK think they’ll have enough to be comfortable in retirement and 34% are expecting to either work longer or get a second job in retirement. Research by Pensions and Lifetime Savings Association (PLSA) has also shown that nearly 80% (30 million people) aren’t confident that they’re saving enough for later life, highlighting just how important it is to start saving early.
This is why property is so popular in the UK – it’s a consistent source of income in a market that’s fairly robust. As a tangible investment, it’s also flexible and can supplement a state pension.
When it comes to retiring, it can never be planned too early. According to the research above, property remains a key target for many people and there’s no doubt that the current property market is a prime target for setting and achieving long-term financial goals – with low-interest rates and residential undersupply in key cities helping to drive prices up.