U.S. lags behind Western Europe in retirement security
By Paula Aven Gladych
The United States ranked 19th in the world for how secure its citizens are in retirement, according to a new study by Natixis Global Asset Management. The findings suggest that Americans will need to pick up a bigger share of their retirement costs especially as the number of retirees grows and the government’s ability to support them fades.
The Natixis Global Retirement Index gauges how well retired citizens live in 150 nations, based on measures of health, material well-being, finances and other factors.
The United States ranked slightly ahead of the United Kingdom, but behind Norway, Switzerland, Luxembourg, Sweden, Austria, Finland, Netherlands, Denmark, Germany, France, Australia, Israel, Canada, Belgium, Japan, Slovenia, Czech Republic and Slovakia in the list’s top 20.
The U.S. is the world’s biggest pension market, but it lags behind less-affluent nations on measures of income and health, according to the index. While the U.S. leads the world in per-capita health spending, individuals are still required to pay a portion of this expense on their own. That leaves many health costs in the hands of retirees and takes resources away from their other needs.
In contrast, Western European nations backed by robust health care and retiree social programs dominate the top of the rankings, taking the first 10 spots
People in the United States will be called on to finance more of their retirement, said John Hailer, president and CEO for the Americas and Asia at Natixis Global Asset Management. Citizens of other industrialized nations can rely on strong social safety nets in old age, but in the U.S., we encourage workers to plan, save and invest, and promote policies that help them meet their future needs, he said.
The U.S. is facing numerous challenges, including a rapidly aging population, rising life expectancy and declining birth rates. Globally, the number of people over the age of 65 is on track to triple by 2050. By that time, the working ratio of the working-age population to those over age 65 in the U.S. is expected to drop from 5-to-1 to 2.8-to-1.
This will make it hard for the government to finance programs like Social Security and Medicare and will mean a heaving financial burden going forward for individuals saving for retirement.
The U.S. also is encountering a retirement savings deficit of $6.6 trillion or nearly $57,000 per household, according to U.S. Senate figures. As a result, 53 percent of American workers age 30 and over will be unprepared for retirement, up significantly from 38 percent in 2011.
Originally published on BenefitsPro.com