We are sitting on a global pensions time bomb. The six countries with the biggest pensions - which includes the UK - are facing a £54 trillion pensions nightmare, which is set to balloon to more than six times the size by 2050 unless something is urgently done about it.
The UK's pensions gap - based on the difference between our income in retirement and the income we need to live on at that stage, will rise from $8 trillion in 2015 to $33 trillion by 2050.
Part of our problem is that, according to the OECD, savers in the UK can expect the state to fund just 38% of their working age income when they retire - lower than any other major advanced economy. Meanwhile, the figures, from the World Economic Forum found that we are simply not putting enough money aside to cover the rest.
Another major contributing factor is the speed at which the world population is ageing. Our pensions are being stretched over longer and longer lifetimes - and they're being stretched too thin. Life expectancy rises by roughly one year every five years. It means that babies born today could easily expect to live to the age of 100. As a result, by 2066 a quarter of the population will be over 65. It means fewer people in work and paying tax in order to fund the pensions of those over the age of 65.
At the same time growth has slowed, interest rates are at rock bottom, and returns on investments have been lower. Shares have performed 3%-5% less well and bond returns 1% and 3% lower than historic averages. It means that workplace pension funds and personal pensions have underperformed - so we're going to end up with even less money to stretch over our longer retirements.
What it means for you
The WEF believes the answer is two-fold. We will all have to work longer, and thanks to the fact that George Osborne linked state pension ages to longevity, we will have to wait longer for our state pensions.
Steven Baxter, Head of Longevity at Club Vita says: "The harsh reality is many of us will have to continue to work far longer than we'd have expected, far beyond the age at which previous generations retired."
We will also have to save more. The WEF says we should be putting aside between 10% and 15% of our salary each year to secure a meaningful pension in retirement. As Ben Simpson, CEO of Menzies Wealth Management, says: "Ultimately, it is about taking control of your financial future. If you don't want the state or your employer to decide your retirement age then act early and start saving now. Frankly, it doesn't really matter whether it's into pensions or an ISA - it's really about getting into the habit of regular saving at an early age, and reaping the benefits of compound growth."
How we spend our pensions
How we spend our pensions
Figures from Saga show that the over 50s now account for the majority of money spent by Brits on travel and tourism. They have the time to spare, the money, and they are healthy enough to take on the world.
A poll from Abta found that in the wake of pension freedoms, 35% of people were considering cashing in at least part of their pension to travel. A separate study by Senior Railcard found that pensioners take an average of three holidays a year, plus two weekends away, and 17 day trips.
Research from Senior Railcard found that retirees eat out an average of three times a month. However, one in ten do so more than twice a week, and one in three people said that one of the first things they did when they retired was to go out for lunch with their friends.
Of course, just because retirees want to enjoy themselves, it doesn't mean they are happy to throw money away. The vast majority are keen to eat at lunchtimes, when a fixed lunch menu tends to be cheaper, and canny retirees are skilled at tracking down pensioner special offers too.
Figures from the Office for National Statistics show that on average nearly a fifth of the money spent by people aged 65-74 is on leisure. This includes everything from the cinema and theatre to golfing and gardening. They spent more on this than on food, energy bills and transport.
A report by Canada Life found that retirees are spending £4,279 a year on having fun - that’s more than £1,000 more than they spend on boring essentials, and is a 74% increase over the past ten years. It went on to predict that this trend was set to continue, and that pension freedoms would encourage people to spoil themselves a bit more in retirement
Pensioner property wealth is now over £850 billion, and all these family homes don’t look after themselves. The Senior Railcard survey put home renovations in the top 20 activities people got stuck into on retirement, and figures from ABTA found that almost a third of people who were considering raiding their pension pots under the new pension freedoms planned to spend the cash on their home. This seems like an eminently sensible investment - looking after what is undoubtedly their most valuable asset.
Unsurprisingly, while some pensioners are very well off indeed, others are struggling with debt. Figures from Key Retirement found that the average retiree has £34,000 of debt.
Most of this is mortgage borrowing - in many cases driven up by the number of people who unwittingly signed up to an interest-only mortgage. However, credit cards, overdrafts, and loans are also common. It’s why so many pensioners have used pension freedoms to access enough cash to pay their debts.
The day to day basics are swallowing up their fair share of pensioner cash too. On average, people aged 65-74 spend a third of their weekly income on essentials like food and bills - which is hardly living the high life.
The bank of gran and grandad has become an increasingly vital source of cash for families. According to Key Retirement, of those who release equity from their property, 21% of them use the cash to treat their children and grandchildren. This includes an average of £33,350 to help children get onto the property ladder, £6,000 to buy them a new car, £11,000 on family weddings, and £24,780 giving grandchildren a helping hand.
While retirees are quite rightly spending what they need to enjoy retirement, they are hardly all throwing caution to the wind, buying flash cars and spending the kids' inheritance.
Most expect to have something left over to pass onto their family after their death. Some 69% expect to leave property in their wills, and 75% expect to leave cash - according to Unbiased.co.uk - because while baby boomers know how to have fun - they also know how to save for the future.