The United States fell three spots to number 17 among 43 countries in a newly released Global Retirement Index that provides a measure of how supportive the climate is for retirement across nations in the developed world.
Despite strong showings in health care spending and strength of financial institutions, the study published by Natixis Global Asset Management shows that several factors reduced the U.S.A.’s overall ranking, including a lagging life expectancy, an increasing gap in economic security, and a decline in the quality-of-life measure among retirees. The overall retirement security score is based on 18 measures of retiree wellbeing across four categories: finances, health, material wellbeing and quality of life.
When looking at the material wellbeing category, the U.S. had the fifth highest income per capita among all nations in the index, but it registered higher levels of income inequality compared to last year, producing the sixth lowest score for income equality. As a result, millions of lower-income Americans are likely missing out on that economic growth and may struggle to save for a secure retirement, the report suggests.
The U.S. outcome underscores a growing concern among Americans, as Baby Boomers represent a large influx of new retirees supported by a smaller group of working-age adults.
“The population is getting older, making retirement security one of the most pressing social issues facing the world. Factors such as increasing longevity, income inequality and the impact of monetary policy on personal savings and pension liabilities are challenging the long-standing assumptions about how Americans plan for and live in retirement,” said Ed Farrington, Executive Vice President of Retirement for Natixis Global Asset Management.
But individuals in the U.S. do appear to be aware of the challenges ahead of them, particularly as they see the continued migration from DB to DC plans. A survey of investors conducted earlier this year by Natixis shows that 78% of respondents feel that funding retirement will fall increasingly to them rather than to the government.
Perhaps most surprisingly, even though many Americans oppose mandates, 80% of respondents to Natixis’ U.S. Survey of Defined Contribution Plan Participants conducted in August 2016 believe it should be mandatory for employers to offer a plan, and 61% believe that individual contributions should also be mandatory.
As for the best performers in the index, the top 10 countries were Norway, Switzerland, Iceland, Sweden, New Zealand, Australia, Germany, Denmark and the Netherlands. The report noted that these countries all have strong social welfare programs and low levels of income inequality.
