Schroders Global Investor Study 2018: People significantly underestimating cost of living in retirement

People globally expect to spend an average of 34% of their retirement income on basic living expenses* but the reality for retirees is that they require nearly 50%.    

Schroders Global Investor Study 2018 has revealed a significant gap between people’s expectations and the financial realities of a life in retirement.

Retirees are receiving a lower income in retirement than people approaching retirement currently expect, with this difference most evident in Asia.     

The study – which surveyed over 22,000 investors from 30 countries** – found that 15% of retirees globally do not have enough income to live comfortably.

Under half (43%) of all retirees admitted that a little more income would be helpful, while 42% stated they have enough income to live comfortably in retirement.

People closer to retirement who are aged 55 and over may also be in for a shock by expecting too much of their retirement income. They predicted that they will need an average of 74% of their current salary or income to live comfortably in retirement. 


In truth, retirees globally are, on average, receiving 61% of their final salary annually. The contrast is greatest in Asia, with retirees receiving 59% of their final salary, while people approaching retirement are expecting 76%.

The gap was smallest for investors in Europe, with retirees receiving 63% of their final salary, compared to an expectation of needing 72% among those close to retirement.

Perhaps an indication that their final income may not stretch far enough, retirees globally are continuing to invest significantly, allocating 19% of their entire retirement savings*** to investments.

In contrast, those yet to retire only anticipate investing 9% of their retirement savings.

The disparity in perceived living expenses was most pronounced in the Americas where, on average, non-retired people are expecting to spend 32% of their annual income on living expenses. Instead, basic living costs in the Americas accounts for 53% of retirees’ incomes.

Investors in Asia had the most realistic expectations of how much they are likely to spend on living expenses, expecting it to consume 32% of their income in retirement. In reality, it is only slightly more at 38% for retirees in Asia on average.   

Lesley-Ann Morgan, Global Head of Retirement, Schroders, commented:

“There is a real danger that people globally are underestimating the proportion of their retirement income that will need to be allocated to basic living expenses and the amount of money they will need to live comfortably in retirement, particularly in the current environment of low returns and increasing inflation.

“There is no magic wand for people. To avoid facing challenging financial circumstances on retirement, they need to recognise the need to start saving as much and as early as possible.

“Leaving retirement saving until you are nearing your 50s and 60s is likely to be too late to make up a savings gap.

“Perhaps as a result of not having enough in retirement, our study showed that retirees were continuing to invest, and this often represented a larger amount than they expected prior to retirement.”  

For the Schroders Global Investor Study 2018 full report, ‘Saving for a comfortable retirement’, please click here

* In April 2018, Schroders commissioned Research Plus Ltd to conduct an independent online survey of over 22,000 people who invest from 30 countries around the globe. The countries included Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, the UK and the US. This research defines “people” as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last ten years

** Any types of investment intended to be used to generate a retirement income, e.g. company pension scheme, state pension scheme, personal pension, other savings and investments, releasing capital/equity from home, money/allowance from relative, inheritance

*** Day-to-day expenses such as food, clothes and rent/mortgage