Report20 February 2019Updated 30 seconds ago

Saving woes stretch retirement outlook

People in Europe, the USA and Australia could be sleepwalking into long-term saving and spending problems. Download the latest ING International Survey below

Executive summary

The ING International Survey Savings 2019, the eighth in an annual series, confirms that 61% of people living in 13 European countries worry about having enough money in retirement. Responses are similar in the USA and Australia.

Retirement expectations

About half of retirees in Europe tell us that they don't continue to enjoy the same standard of living they had when they were working. Two in five (39%) of those in Europe who have not yet retired confirm they expect to get less in retirement than they paid into their pension. And more than half (54%) of Europeans who have not yet retired tell us they expect they’ll need to continue to earn some money after they’ve officially stopped working. Adding to the uncertainty, studies suggest many may end up retiring earlier than they expect, and not by choice.

Savings are a key way to invest in the future. Yet our survey reveals that about one in four (27%) Europeans have no savings at present. Beyond Europe, the shares are similar in Australia (22%) and the USA (27%).

If people cannot save today, how can they save for retirement?

Without even a minimal savings buffer, families and individuals are less able to mitigate unexpected nearterm events, such as car breakdowns or health emergencies, let alone build funds for retirement. The typically recommended minimum emergency buffer is the equivalent of three to six months’ net pay. But our full data set shows that even among Europeans who have savings, 42% have no more than three months’ take-home pay put aside. 

Many people are barely managing

Two-thirds (66%) of Europeans who have no savings tell us they simply don’t earn enough to put anything aside for the future. Another 14% in Europe report that unexpected expenses have eaten away at their earnings, leaving them with nothing to save. And around half (51%) tell us their pay sometimes doesn’t cover the whole period between paydays, forcing many to reduce their spending (sometimes also using credit cards or another form of borrowing). It appears that many people are,  if not quite living on the edge in budgetary terms, barely managing to keep their heads above water.

Tech trends only partly helping

If you ollow tech trends, you could be forgiven for thinking mobile tech in particular might help people manage their money better, which is what 71% of Europeans reported in the ING International Survey Mobile Banking 2016. Half of respondents in our Europe sample tell us they use mobile apps for spending or transferring money. However, they admit the main impact of this is simply being able to spend money more often, hardly conducive to boosting long-term savings. Smaller percentages give answers that suggest using mobile apps, for example, benefit their long-term savings or investments.

Many are struggling to save anything at all. So, with state pension systems in some countries under strain, it’s important to take a fresh look at how to meet people’s hopes for the future.