Looking for a safe haven for retirement? The world’s top five countries for a secure retirement lie in Europe, according to the 2016 Global Retirement Index developed by Natixis Global Asset Management and CoreData Research. In fact, Northern Europe dominates the top 10, with seven entries.
Those seven countries are: Norway (1), Switzerland (2), Iceland (3), Sweden (5), Germany (7), Netherlands (8) and Austria (9).
The 3 non-European nations in the top 10 are New Zealand (4), Australia (6) and Canada (10).
2016 Natixis Global Retirement Index
|1. Norway||2. Switzerland||3. Iceland||4. New Zealand|
|5. Sweden||6. Australia||7. German||8. Netherlands|
|9. Austria||10. Canada||11. Finland||12. Denmark|
|13. Luxembourg||14. United States||15. Belgium||16. Ireland|
|17. United Kingdom||18. Czech Republic||19. Israel||20. France|
|21. Japan||22. South Korea||23. Malta||24. Slovenia|
|25. Singapore||26. Slovakia||27. Estonia||28. Italy|
|29. Poland||30. Lithuania||31. Chile||32. Latvia|
|33. Hungary||34. Portugal||35. Mexico||36. Cyprus|
|37. Spain||38. China||39. Turkey||40. Russia|
|41. Brazil||42. Greece||43. India|
Source: Natixis Global Asset Management
Retirement Security Defined
So what is it that makes retirement “secure?” Natixis Global Asset Management, which has compiled the index for four years, describes its Global Retirement Index (GRI) as “multidimensional,” incorporating 18 performance indicators that are grouped into four sub-indices: Health, Finances in Retirement, Quality of Life and Material Wellbeing.
The performance indicators, Natixis says, measure everything from inflation to tax pressure, happiness to air quality, life expectancy to health expenditures – even income equality and unemployment.
Changes for 2016
In order to improve the index, Natixis made two substantial changes in methodology for 2016. First, it changed to a five-year average of real interest rates and inflation in order to provide a longer-term perspective regarding those two variables.
Second, the list of countries has been significantly reduced from 150 to 43. According to Natixis, the shorter country list allows for a more specific focus on issues faced by retirement systems around the globe.
What About the U.S?
When it comes to retirement security, among leading nations in the world, the United States is not in the top 10, let alone the top five. The U.S. ranks 14th worldwide for 2016.
America’s 14th place finish in 2016 appears to be a significant improvement over the country’s 19th place finish in each of the previous three years of the Natixis Global Retirement Index.
As Natixis points out however, “… considering the new methodology and the shorter list of countries … this year’s rankings aren’t directly comparable to the rankings in last year’s report.”
Why the U.S. Falls Short
The United States benefits from high per-capita income, stable financial institutions, low inflation and low unemployment. Those factors, however, cannot overcome high income inequality (the highest among developed nations in the world) and the sheer number of retirees compared to workers.
In simple terms, too many older people do not have sufficient retirement savings and there are not enough workers paying into Social Security and Medicare to support those programs long-term.
Published 20 July 2016