HSBC's The Future of Retirement: A new reality study found that the average retirement in the UK is expected to last 19 years, but that average retirement savings will be used up in a little over a third of that time (37%), leaving people entering a period of significantly reduced living standards.
This 12-year shortfall in the UK is the worst identified by the study, which covers 15,000 people in 15 countries around the world.
HSBC predicts that the situation is likely to worsen as life expectancy continues to rise around the world, and people fail to face up to the reality of making up the shortfall while they can.
Christine Foyster, head of wealth development, HSBC UK said: "The concept of retirement is evolving all the time, and we know many people aren't prepared. But now we know by just how much.
"People are living longer, through tougher economic times, but their expectations about their standard of living in retirement remain unchanged. They are putting off the inevitable, which is the reality of significant cuts to their living standards in their twilight years after their savings run out."
Worldwide, the study found that people will on average run out of retirement savings just over halfway into their retirement.
The report says that this will leave many unable to fund the aspirations they have for their retirement years, such as taking frequent holidays (49%), making home improvements (31%) and learning new hobbies (30%).
It also leaves people potentially unprepared for additional living expenses in retirement, such as paying for long-term care.
The study found 56% of the UK working population not preparing adequately for later life, with one in five (19%) saving nothing at all. Financial concerns are their greatest fear about living in retirement, with 63% saying they fear financial hardship (compared with 57% globally), and 31% worrying that they will have to work longer than they want to.
Foyster added: "People throughout history have faced the question of how to provide for the future, and today's savers are no exception. Yet as daunting as the current challenges may seem, the solution is simple: the earlier you start to plan, the better prepared you will be.
"For some this may mean beginning to save more, whereas others will choose to work longer. The key is for everyone, regardless of age or income, to make small changes now to ensure they get the retirement they expect."
