Americans are regularly barraged by news about their retirement unpreparedness -- courtesy of surveys mostly commissioned by financial firms. The usual conclusion: We need help, desperately. But rarely do we get a glimpse of how people who live in foreign lands perceive their retirement readiness.
A new report from HSBC plumbs information from interviews and online surveys of more than 17,000 people in 17 countries. Called "The Future of Retirement: The power of planning," the report reveals that people in emerging economies have a lot in common with those in developed countries, including similar attitudes about retirement planning. But those in emerging economies are a lot more optimistic than we are. Here's an excerpt from the report:
"In the West, retirement has been associated with entitlement to generous pension benefits whereas in the East it has been associated with a sense of responsibility to the older generation, who have often found themselves financially dependent on younger relatives. That both these traditions are expected to diminish over time is producing a bipolar world -- when it comes to perceptions of the future of retirement.
"People in the West are concerned at the passing of the traditional retirement; people in the East in the main are more upbeat and confident about their prospects."
Disparate fortunes, attitudes
In developed countries, people grouse that they'll be worse off than their parents, mainly because company pensions and state pensions (such as Social Security) will be less generous than in the past. The French are most pessimistic, with 69 percent expecting their retirement to be worse than that of their parents, and only 13 percent saying they'd be better off.
Yet somehow, the people in emerging markets see a rosier future for themselves because they see a way out of poverty. Here's another excerpt:
"In the emerging markets of Asia and the Middle East, the death of the traditional retirement is producing a very different picture. We see the traditional dependency in old age being transformed into greater financial self-reliance, fueled by the rapid improvements in household incomes and living standards. For example, in just five years, India's per capita gross national income rose by a staggering 87 percent from USD630 in 2004 to USD1,180. While still low compared by international standards, people's life chances are being rapidly improved in India as in other emerging markets, which filters through into a more confident and optimistic view of retirement."
Even though I knew the answer, I had to ask a colleague: Are these monthly incomes or annual incomes? The answer is annual. But if they were monthly, they'd still be near the poverty level in the U.S.
Despite income disparities, the report says that survey respondents in Europe and North America are more likely to anticipate financial hardship in retirement, while "most of the emerging markets take a less gloomy view of retirement."
Another culture clash is the difference in savings rates. The people in India and China save one-third of their income, mostly because they anticipate having to take care of their elders. Put another way, "Chinese households currently save the equivalent of 38 percent of their GDP, while in India the figure is 35 percent. This compares with 3.9 percent in the U.S.," according to the report.
Not surprisingly, the report goes on to chronicle the phenomenon of inadequate retirement savings at the global level. Its takeaway is that having a financial plan and getting financial advice make a huge difference in amassing assets. But it was the differences in incomes and attitudes that blew me away.
I'm humbled by it. What about you?
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