Employees will run out of savings just seven years into their retirement, according to research by HSBC.
The future of retirement: a new reality report found that the average retirement in the UK is expected to last 19 years, however average retirement savings will be used up after a third of that time.
The retirement shortfall in Britain is the worst identified by the global research, which surveyed 15,000 people in 15 countries.
Two-thirds of UK respondents think their financial preparations for a comfortable retirement are inadequate, with 34% not preparing at all and 33% not doing enough.
The research also found that 42% of UK respondents expect their retirement income to come from the state, while 18% said the state pension would be their most important source of retirement income.
More than a third (39%) of UK respondents said they started planning financially for retirement after their employer paid into their workplace pension scheme for them.
Among UK respondents, the research also found:
- 56% are not prepared adequately for later life, with 19% not saving at all.
- 63% fear financial hardship, while 31% worry that they will have to work longer than they want to.
- 58% of respondents who have not yet retired would prioritise saving for a holiday rather than for their retirement.
- 14% of those who have not yet retired admitted they would dip into their retirement pot to cope with major life events, such as buying a home or paying for their children’s education.
Christine Foyster, head of wealth development at 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.
“As daunting as the current challenges may seem, the solution is simple: the earlier they start to plan the better prepared they will be.
“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.”