The U.S. ranks 14th worldwide in retirement security, said the 2016 Global Retirement Index, released Tuesday by Natixis Global Asset Management.
The index, launched in 2013, gauges how well retired citizens live in various nations, based on health, finances, material well-being, quality of life and other factors.
This year, Natixis looked at just 43 countries with developed retirement systems, down from 150 developed and developing countries in 2015, and adopted a five-year average for its interest rate and inflation picture.
Last year, the U.S. ranked 19th among the 150 countries and would have ranked 15th under the new methodology, said Ed Farrington, global head of retirement for Natixis, in a telephone interview.
The U.S. continues to benefit from high per capita income, low inflation, stable financial institutions and falling unemployment, but struggles from low income equality (ranking 37th among the 43 countries), high levels of public debt and rising tax burdens, Natixis said in a new release about the index. Faced with short-term cash pressures, people are treating retirement savings like a checking account, Mr. Farrington said. A 2015 Natixis survey of 1,000 U.S. defined contribution plan participants found that 30% had taken a withdrawal and 37% had taken a loan against their savings. A growing ratio of retirees to active workers is also putting pressure on the U.S. and other developed countries, Mr. Farrington said.
Norway and Switzerland, which have strong government benefits, employer pension plans and personal savings practices in place, ranked first and second in retirement security, respectively. They would also have ranked first and second last year under the new methodology.
Rounding out the top 10 were Iceland, New Zealand, Sweden, Australia, Germany, the Netherlands, Austria and Canada. Germany, which would have ranked 12th last year under the new methodology, was one of the most-improved performers.
On Canada, Mr. Farrington said the country’s high per capita income and relatively strong income equality puts people in “a good place to participate in a workplace savings plan.” However, a Natixis survey conducted earlier this year found only 55% of Canadians surveyed participate in a workplace savings plan vs. 64% of respondents globally. Data was unavailable on how many Canadians actually have access to a workplace plan.
The five worst performers in 2016 were Turkey, Russia, Brazil, Greece and India.
The full report is available on the Natixis Durable Portfolio Research Center website.
