The UK could be hit by a 'perfect storm' of financial, individual and demographic elements if people do not close the 'preparedness gap' by planning for retirement as soon as possible, says an HSBC report.

HSBC's fifth annual Future of Retirement study, published 10 June, surveyed around 15,000 people in 15 countries. This year's report, because of the economic circumstances, focused on how prepared people are for retirement and what they need to do in order to ensure an adequate retirement income.

Worryingly, 76 per cent of people in the UK are saying they have no idea what their retirement income will look like and it is impossible to plan successfully for retirement if without this information. This is what HSBC has labelled the 'preparedness gap'.

The report focuses on three themes that need to be tackled in order to avoid a 'perfect storm'. The first is the financial factor. Many people approaching retirement have seen their pension fund value fall in the past 12 to 18 months, as equities have plummeted, which means that a number of people are going to have less funds to retire with than they thought they would. The second factor is that people are cutting back on discretionary spending, as they focus on short-term financial elements, and many unfortunately view retirement saving as discretionary spending. Added to this is the issue of demographics because people are still living longer.

"We've got these three factors converging all at once," explained Robert Lang, head of insurance Europe at HSBC, to Pensions Age, "which is making the retirement challenge for a number of individuals a lot more difficult. The overwhelming message from this study is that people really do need to prepare now.

"They need understand their circumstances, their priorities, and perhaps when they're getting disciplined about their finances, include retirement savings as one of those elements they remain disciplined on because the demographic challenge is getting larger and larger, and cutting back now would make that challenge even more difficult."

The semi-comforting news, added Lang, is that one in four people HSBC surveyed in the UK said they felt well prepared for retirement, whereas the global result was only one in eight.

- Pensions Age June 2009

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