A new World Economic Forum (WEF) report has found that people around the world will long outlive their retirement savings.
The report, out this week, found that strained government and employee retirement plans have left individuals increasingly responsible for their own retirement, while many find their personal savings to be inadequate.
“Retirees in six major economies should expect to outlive their savings by eight to nearly 20 years on average,” it said.
“To close these savings gaps, individuals and policy-makers must take steps to ensure individual retirement investments can provide returns retirees won’t outlive.”
As part of the report, the WEF looked at six major economies: the US, the Netherlands, the UK, Australia, Canada and Japan.
The WEF found that most male retirees can expect to live past their savings by nearly a decade. And women for even longer.
“These shortfalls can vary greatly by country and gender,” the WEF pointed out.
“Men in the United States are expected to outlive their savings by about eight years while women in Japan will live nearly 20 years past their savings account.
“Despite these vast differences, the average retiree in Australia, Canada, Japan, the Netherlands, the United Kingdom, or the US will not be able to last through retirement on savings alone.”
Experts have previously sounded alarm bells about the state of retirement savings.
According to Old Mutual, South Africans need to make provision for an additional 20 – 25 years if you are planning to retire at age 65.
“On the upside, you should be debt-free i.e. you don’t have to worry about car or bond repayments and university fees. On the downside you do need to take care of your health,” it said.
“With ageing comes many unwanted ailments. Having enough medical cover to keep you comfortable is essential in South Africa. Now imagine reaching your retirement age without having saved adequately and ending up on a state pension of R1,620 per month. From this amount, groceries, electricity, utilities and other expenses need to be paid.”
In addition, Old Mutual said that South Africans should look to save between 70 -80% of their current income.
This means that if you’re earning R40,000 per month, you’ll need between R28,000 to R32,000 per month when you retire. This equates to between R7 million – R8 million if you live to 85.