Four practical tips to help you plan for your retirement
Ageing populations, rising health costs, and long-term low interest rates on savings have raised concerns about the ability of economies to support older generations. With such economic uncertainty, it has never been more important to save and prepare for the changing retirement landscape.
HSBC’s Future of Retirement survey looked at how working age people are planning for retirement. Shifting sands covers the views of over 18,000 people in 16 countries. It reveals how political, social, economic and technological changes have influenced people’s spending, saving, and investment patterns.
The study uncovered four practical actions that may help you plan for a better retirement.
- Be realistic about your retirement.
Increased access to healthcare, rising standards of living, and technological advancements have meant life expectancies are increasing. Sixty-four percent of people think millennials will live much longer, which means they will need more to support themselves for longer. In addition, 75% of working age people are concerned rising medical costs will mean retirees will have to spend more in retirement.
To make sure you’re ready for a longer, and perhaps, more expensive retirement you may have to be prepared to start saving earlier, as well as being more aggressive with your budget. It is important to plan for the increasing cost of healthcare in your budget.
- Consider different sources of funding.
‘Lower for longer’ interest rates have meant the opportunity cost of leaving money in savings has increased. Thirty-seven percent of working age people think low interest rates mean they will need to move their money from savings into investments. What’s more, 47% think property offers the best returns for retirement saving.
Consider adjusting your savings and investment portfolio to spread the risk and maximise returns for retirement. Actively seek information to guide financial decisions and be realistic about expected returns.
- Plan for the unexpected.
Economic volatility means it’s more important than ever to prepare for unexpected events. Fifty-one percent of working age people say they will continue working to some extent in retirement. Furthermore, 28% of working age people would go back to work if their retirement income could no longer provide the standard of living they were used to.
Unexpected expenses can have a major impact your lifestyle in retirement. You should aim to budget for worst case scenarios and consider seeking financial advice to protect your retirement income.
- Take advantage of technology.
New technologies have made it easier to make informed decisions about retirement. Over a third of working age people agree that new technology makes it easier to budget for their retirement. Thirteen percent of people have used an online retirement calculator and 7% a retirement planning app.
The future of retirement is changing, and so are the strategies to prepare for it.
By using new technologies available, you could better navigate shifting retirement landscape to meet your future financial needs.
Reproduced with permission from The Future of Retirement Shifting sands, published in 2017 by HSBC Holdings plc.