Unless more is done, older people will either need to get by on less or postpone retirement, he said. “You either spend less or you make more.”
The retirement savings gap is about 10 years for men in the UK, Australia, Canada, and the Netherlands, the forum says. Longer-living women in those countries face an extra two to three years of financial uncertainty.
In Australia, the forum calculates that 65-year-olds have enough savings to cover just 9.7 years of retirement income. That leaves the average Aussie man with a gap of 9.9 years. Women, who live longer, face a 12.6-year gap.
In the US, men’s retirement savings fall 8.3 years short, and women would need savings for 10.9 more years to last them through their retirement years.
The forum assumed retirees would need enough income to cover 70 per cent of their pre-retirement pay, and didn’t include Centrelink or other government welfare payments in the total.
“The real risk people need to manage when investing in their future is the risk of outliving their retirement savings,” warned Han Yik.
“As people are living longer, they must ensure they have enough retirement funds to last them through their longer lives. This requires investing with a long-term mindset earlier in life to increase total savings later on.”
Most of the world’s retirees are doing well compared with those in Japan, where the retirement savings gap is 15 years for men and almost 20 years for women.
While Japanese workers save no less than others, they tend to invest in very safe assets that produce few gains over time, Yik said. As a result, average savings in Japan are only enough to cover 4.5 years of retirement.
Meanwhile, life expectancy at birth for Japanese women is 87.1 years — the highest in the world, according to the Organization for Economic Cooperation and Development — and 81 years for men.
The size of the world’s collective retirement savings gap could exceed $US400 trillion ($735 trillion) by 2050, up from $US70 trillion in 2015, according to the report. The US’s savings gap will be the largest at $US137 trillion, followed by China at $US119 trillion and India at $US85 trillion.