People in the United States, United Kingdom and Australia are struggling to prepare for retirement because of increasing demands on them to manage their own risks, according to a new international survey published Thursday by the American Academy of Actuaries, the Institute and Faculty of Actuaries and the Actuaries Institute of Australia.
"Many people start planning but can't follow through because they aren't equipped to address complex questions like how much they need to save for retirement, how they will cover the risk of an especially long life, or how they will handle unexpected costs associated with chronic health conditions as they age," said Ted Goldman, senior pension fellow with the American Academy of Actuaries, in a statement. Mr. Goldman called on policymakers to support education initiatives to help retirement savers.
The survey concluded that slightly more than half of all respondents in the survey of working-age people age 18 to 64 feel prepared for retirement, with longevity being the least understood. "Only about one-third of the respondents know how long their assets will last in retirement, and about half have planned for the possibility of a longer-than-expected life," the survey concluded.
All three countries are shifting away from defined benefit systems. The U.K. has a larger proportion of its population over 65 and a smaller proportion of that group (21%) employed than Australia, with 25% still working, or the United States at 30%, yet it spends a similar proportion of its gross domestic product on benefits for its older population as does the U.S., and significantly more than Australia.
In addition to targeted financial education, the report recommends greater use of default features in private retirement plans, and ensuring that public pension and social insurance systems are sustainable and adequate.
The survey report is available on the academy's website.