FinFacts Business News
May 11, 2005
World survey shows most want
end to compulsory retirement
HSBC, one of the world's biggest banks, has published the world’s most comprehensive study on global attitudes to ageing and retirement1, which shows that for many people traditional retirement is a thing of the past. Eighty per cent want to scrap mandatory retirement while just 14 per cent equate financial independence with old age.
Entitled ‘The Future of Retirement’, the study examines attitudes in Brazil, Canada, mainland China and Hong Kong, France, India, Japan, Mexico, the UK and the USA - countries and territories which contain over half of the world’s people and combine to give a representative sample of the global population.
Sir John Bond, Group Chairman of HSBC Holdings plc, said: “The ageing of the ‘baby boomer’ generation, declining fertility rates2 and increasing lifespans3 are combining to create new and complex demographic pressures across the globe. The resulting changes will in many cases be very positive but they also create real challenges, not least with regard to the funding of retirement. Even in Canada, the nation our research found to be the best prepared for retirement, just 24 per cent now equate later life with financial independence.
“Yet in this landmark study we have found that the people of the world are already creating their own solutions. For example, we found that three in every four people said that working would be part of an ideal later life, while there is a growing acceptance that we will retire later to ease the burden on pensions and taxation. But people are not simply expecting to work longer, now they want to mix work and leisure, learning and rest. It is critical that governments, regulators, corporations and financial institutions understand these emerging trends in behaviour and attitude if we are to successfully tackle the pressing issues before us.”
In six of the 10 societies surveyed, alternating work and leisure was seen by the majority as the ideal ‘later lifestyle’ - already a major shift away from the notion that later life is dominated by a passive retirement. Even in India and the UK, the most sceptical about flexible work arrangements, more than a quarter want to take on some work in their later years.
Just as the research shows a willingness to reject traditional models of retirement, so it is apparent that what people want is greater choice in when and how they retire.
Just 17 per cent felt employers should have a mandatory retirement age while 80 per cent felt that people should go on working as long as they are able, if they wish to. Only 29 per cent thought avoiding stress was important to a happy later life.
Less than a quarter (21 per cent) said that never working for pay again would form part of their ideal retirement.
The median age of the global population will increase dramatically by 20404, straining the funding of retirement. But given the choice between increasing taxes, reducing pensions or raising the retirement age to ease this burden, 45 per cent chose the latter, emphasising the desire of many to make their own decisions. Just 26 per cent said they would accept higher taxes. Only 15 per cent opted to reduce pension benefits.
However, while the research uncovered a growing desire to redefine how we traditionally think about later life, it also found that people in many countries are unsure of where to go to find appropriate advice. Almost two-thirds (63 per cent) of those surveyed said they had begun to prepare for retirement but most of this was restricted to reading up on the subject and discussion with family and friends.
“This new way of thinking highlighted by the research should change the way governments, companies and financial institutions deal with ageing and retirement. Instead of adhering to the traditional model where individuals go to school, spend many years working and then retire we need to think about a truly blended life plan where people can cycle through periods of work, leisure and education,” said Dr Ken Dychtwald, President of Age Wave, the US-based consultancy practice which managed the research for HSBC.
"There is a clear need across the world for better, smarter advisory services combined with more flexible, more transparent savings and investment products. But people know that the opportunities are out there, that they can make the lives they want. It would be folly to ignore the economic realities driving some of these changes in attitude but they are no more or less important than the increasing quality and length of later life that leaves us wanting more than our parents and grandparents expected from retirement. What those of us in the business need to do now is make it easier for everyone to realise those aspirations."
Underlining the growing flexibility of attitudes towards retirement, the research found that around the world what defines age is changing. Seventy-one per said that a decline in mental or physical ability marked old age. Only in Canada, India and Hong Kong did those surveyed say they could define it as reaching a specific age. In none of the surveyed societies did a majority equate retirement with old age.
Significantly, only 14 per cent equated reaching old age (however they defined it) with financial independence, demonstrating that economic and demographic pressures are working together to change attitudes to retirement.
Although it is clear that what people around the world want from later life is a great deal more complex and flexible than established debate would suggest, when people expect to retire from their main occupations remains relatively constant. HSBC’s research shows that, globally, the average retirement age was 58 in 2004. But those not yet retired said that they expect to retire at 59 on average.
This combination of a relatively static primary retirement age, lack of confidence in financial independence in later life and a rapidly increasing lifespan is driving revolutionary change in the way that people around the world think about their later years.
Sir John Bond concluded: “Few issues are as important to our customers as planning for their later years. This research gives us, and we hope many others, an invaluable insight into how attitudes and ambitions are changing around the world. We remain committed to exploring this area more fully, using our findings to guide our own products and services to better fit the increasingly complex, increasingly flexible demands of consumers as well as adding a new dimension to the global debate.”
‘The Future of Retirement’ study was conducted by market research company Harris Interactive under the guidance of HSBC and Age Wave.
Footnotes:
|
Nation/Territory |
Median Age - 1960 |
Median Age - 2040 |
|---|---|---|
|
Brazil |
19 |
39 |
|
Canada |
26 |
46 |
|
China |
22 |
43 |
|
France |
33 |
44 |
|
Hong Kong |
23 |
49 |
|
India |
20 |
35 |
|
Japan |
26 |
53 |
|
Mexico |
18 |
39 |
|
United Kingdom |
35 |
44 |
|
United States of America |
30 |
39 |