While retirement readiness is improving, many respondents to an Aegon survey fail to plan for their retirement properly or have an appropriate backup plan in place.
According to the Aegon Retirement Readiness index 2015, conducted in collaboration with the Transamerica Center for Retirement Studies, overall retirement readiness has improved in the four years the firm has been conducing this survey.
The retirement readiness index is a measure of how well participant expectations of retirement are likely to be fulfilled. For 2015, the global index is 5.86, up from 5.76 last year. India has the highest index at 7, while Japan has the lowest at 4.8. The U.S. index is 6.5, the U.K. index is 6, and the Australia index is 5.8.
Despite the improvement, most of the world’s employees are only achieving what Aegon calls a low score, somewhere between zero and 5.9, and only 13% of global respondents have a written retirement strategy, and in no country did more than 25% respond they have a written strategy. The highest was Brazil at 23%.
Globally, 43% of respondents said they have a plan, but it is not written down, 39% have no retirement strategy at all and 4% don’t know.
Of those respondents who have a written plan, the survey said 75% belong to the category of “habitual savers,” answering that “I always make sure that I am saving for retirement.” Overall, only 39% say they are habitual savers.
There is also a widespread lack of what the survey calls “financial resilience,” that is, a backup plan to avoid unexpected financial shocks. Fifty-nine percent of global respondents have no such backup plan. Of those respondents, 61% plan to rely on their savings.
Catherine Collinson, president of both the Transamerica Institute and Transamerica Center for Retirement Studies, said in a telephone interview that another notable result was how respondents see the future of government retirement plans in an era when funding is a major issue.
“Workers are pretty practical in terms of how their sustainability can be insured going forward,” Ms. Collinson said. “And specifically most recognize changes are needed and cite some pretty practical solutions which range from either taking a balanced approach which would involve increasing taxes and reducing benefits or one or the other. Only 7% globally believe change is not necessary.”
Aegon interviewed 14,400 active employees and 1,600 retired employees in 15 countries including the U.S., U.K., Australia and Germany, between Feb. 6 and Feb. 23.