The U.S. now ranks 20th globally for retirement security, according to Natixis Investment Managers' 2023 Global Retirement index, dropping two spots from last year, due to such factors as high inflation, steep public debt and a sharp decline in U.S. health scores.
These factors offset improvements in employment and income inequality, lowering the U.S. on a relative basis in the 44-country index, said a Sept. 13 news release.
Natixis IM created the index in collaboration with Core Data Research and focuses on four subindexes: retirement finances, material well-being, health, and quality of life.
Among the four subindexes, the U.S. ranked 13th for finances in retirement in 2023, down from 11th in the prior year; 21st for material well-being, up from 30th; 21st for quality of life, no change; and 25th for health, down from 17th.
Ironically, despite a drop in the overall ranking, the U.S. actually received an overall score of 71% in 2023, up from 69% in 2022. Natixis IM attributed the higher overall score primarily to an increase in the material well-being subindex, which was driven by employment and wage gains. However, the U.S. also witnessed a sharp decline in the health subindex, as the COVID-19 pandemic lowered life expectancy, while drug-related deaths increased.
For the second straight year Norway held the top position in the index, followed by Switzerland, Iceland and Ireland — all of which held the same rankings as in 2022. Luxembourg and the Netherlands both moved up two notches in the rankings to fifth and sixth, respectively, while Australia fell out of the top five to seventh, and New Zealand dropped to eighth place. Germany moved into the top 10 in ninth place, supplanting Denmark, which slipped to 10th.
"As economies have rebounded from the global pandemic, employment and wages have increased but so has inflation, forcing central banks to boost interest rates" said Liana Magner, executive vice president and head of retirement and institutional in the U.S. for Natixis IM, in the news release issued in conjunction with the survey. "It's a good news-bad news scenario for retirement security, and further underscores the complexity of the retirement funding challenge."