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HSBC Insurance Study Reveals Global Desire for 'Personal' Rather Than 'Cash' Legacy

Posted on: Tuesday, 13 May 2008, 09:00 CDT

RETIREMENT GENERATIONS (both pre-retirees 40-60 years and post-retirees 60-69 years) across the world would prefer to leave their perspective on life rather than money or property to their heirs, according to a new global survey published today by HSBC Insurance. HSBC Insurance's fourth annual The Future of Retirement study, undertaken with Oxford University's Institute of Ageing, focuses on how people from across the world are preparing for retirement and examines four key themes -- Inheritance, Preparedness, Expectations and Choice.

Inheritance

The research report, entitled, Investing In Later Life was conducted among 21,000 people across 21 countries and is the largest of its kind in the world. According to the study, when individuals across generations and continents were asked "what would you like most to leave to your family" 60% said they wanted to leave their perspective on life while less than 10% said they wanted to leave money to their heirs.

This preference for passing on personal values rather than cash or property emerges across continents including Europe, Asia, Africa and the Americas.

81% of respondents in the U.S. said they want their heirs to inherit these personal values (38% spirit/sense of humour, 20% their knowledge, 7% their way of giving/supporting the community and 16% their religion).

In the U.S. only 19% want their heirs to inherit hard values (13% home/property, 6% their money and 0% their business/career).

64% of respondents in Europe want to leave behind their perspective on life (sense of humour/spirit, way of giving to the community) and knowledge.

Only 30% of respondents in Europe want to leave money and property.

The desire to ensure personal values were transferred is highest among women.

Stephen Green, Group Chairman of HSBC said: "The study highlights a growing desire for people to be in control of their own future financial security and identifies an acceptance of the need for pragmatism to fund later life. Another strong and surprising finding is that we want to pass on our perspective on life and our knowledge from generation to generation."

In order to highlight the importance of planning a legacy for both personal and financial values, HSBC Bank in the U.S. has developed "My Life" books. These books will allow HSBC Premier customers to articulate the values that they would like to pass on to future generations. The completed books can be shared with family and friends now or later.

"The creation of the My Life legacy books will serve as a starting point for having really important discussions with our clients," said Geoff Brooks, Senior Vice President, National Sales Premier and Insurance, HSBC Bank USA, N.A. "Our Premier Relationship Managers will help clients prepare holistically for retirement and the first step in doing so is have an open dialogue which is far broader than pure financial values."

Preparedness

The report reveals only a small proportion of people, mainly in Northern America and Europe will be well prepared for later life. But a larger group from across Eastern Europe, Asia and Latin America will be wholly unprepared and always struggle in retirement:

In most transitional economies, between 50% and 80% fear a lack of money in later life; that number declines with increasing age, from 58% to 44% globally.

In Europe and North America the proportion fearing a lack of resources in their later years drops below 55%.

Globally around 70% fear illness and disability in old age; this reaches a high of 90% in France, but falls to around 50% in India, China and Taiwan.

Some 60% around the world fear being dependent on others in later life; again this figure falls to between around 30% and 50% in the Asian economies and rises to between 60% and 85% in Denmark, France and Germany and in some of the transitional economies, such as Brazil and Russia.

In between the two extremes of preparedness is a significant group of pre-retirees who, while optimistic and practical in their attitudes, may not be able to meet their expectations of later life but are still in a position to gain greater control over their retirement needs. This group will typically face the prospect of limited government support, modest income and families that will be able to provide little help.

Many of this group are also now seriously thinking about whether working longer is going to be a key strategy for the second half of their lives. Taken together it is possible to speak about a generation of pre-retirees who are currently ill-prepared for their retirement. The study also shows that those dependent on a single source of retirement income run the greatest risk of being ill prepared.

Looking at sources of retirement income, the research shows that stocks and shares are the main source of both pre- and post-retirement income in the US with 59% pre-retirement and 52% post-retirement stating this as a main source of their own retirement income. Europeans and Asians will broadly rely on savings. People in Latin America will fund their retirement through annuities (Brazil) and assets (Mexico). However, the survey shows substantial variations between countries.

"There is an ill-prepared generation, the so called 'IP' generation, of pragmatic pre-retirees whose expectations of retirement are in danger of not being met unless they stop and consider now the ways in which they need to plan for the second half of their lives," said Patrick Cozza, Senior Executive Vice President, HSBC Insurance North America. "Our study reveals that attitudes toward retirement are changing, particularly how long we choose to work, in comparison with those already enjoying retirement. The 'IP' generation, the ones who need to broaden their sources of retirement income, accept that governments will play less of a supporting role in the future and recognise that longer working lives may become a reality."

Expectations

The survey also shows a set of strong attitudes about how nearly two in three people believe governments should play a significant role in supporting those in retirement. However, in contrast three out of four people believe that, in reality, governments will not be in a position to provide that support.

The report reveals people's view of the role of governments in supporting ageing populations:

Globally, 34% of respondents are in favor of enforced private savings, reaching a high of 68% in Germany.

Some 25% feel working longer is key.

Around 12% feel the solution lies in raising taxes.

Working longer is the preferred option in Japan only, at 46%.

Only in Sweden is raising taxes seen as the most important government role, with 33% support.

In the US, expectation of government support is low and there are no significant pre- and post-retirement differences, the figures being 15% pre-retirement and 14% post-retirement believing that government should bear most of the financial costs of supporting them in retirement.

The importance given to the 'four pillars' of later life support (government, employer, individuals and family) varies across the globe. In the UK, France and Germany the importance of government tends to rise with the age of the respondent. France places family as the lowest priority, while in the UK and Germany each source of support is given a similar weighting.

There are more marked differences between North and South America. In Brazil and Mexico people have the most confidence in their governments. While in the USA and Canada individuals regard themselves as the most important. In Asia, people believe that individuals or their families will provide support in their retirement years.

Professor Sarah Harper, Director of the Oxford Institute of Ageing and author of the Report said: "The latest HSBC Future of Retirement research has further expanded our growing bank of knowledge into the mindset of post retirees and gives us a unique contemporary insight into the challenges currently being grappled with by pre-retirees."

Notes to editors

The Future of Retirement:

For further information visit www.hsbc.com/retirement

HSBC Insurance

HSBC Insurance provides policies in over 40 countries and territories to its personal, commercial, corporate, institutional and private banking customers. The diverse needs of its customers worldwide are recognised by HSBC Insurance and it offers products and services to suit them including: life assurance, general insurance, commercial risk and retirement provision. Find out more at www.hsbc.com/insurance

Oxford Institute of Ageing

The Oxford Institute of Ageing, founded in 2001, is a multidisciplinary institute within the Social Sciences Division at the University of Oxford. It addresses the globalization of ageing at the global, societal and individual level. Under the directorship of Professor Sarah Harper, it carries out research into population ageing, analyzing the economic, social, political and demographic implications at both the national and international levels. It also works with the corporate, policy, media and governance sectors, advising on the implications of population ageing. The Oxford Institute of Ageing is in a strategic alliance with HSBC. Visit www.ageing.ox.ac.uk for more information.

Source: Business Wire

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