Which Countries’ Citizens Enjoy the Best Retirement? (Guess Where the U.S. Ranks?)

Which Countries’ Citizens Enjoy the Best Retirement? (Guess Where the U.S. Ranks?)

So, which country’s citizens enjoy the best retirement?

According to the Global Retirement Index Report from Natixis Investment Managers, the citizens from these 10 nations rank highest:

  1. Iceland
  2. Switzerland
  3. Norway
  4. Ireland
  5. Netherlands
  6. New Zealand
  7. Australia
  8. Canada
  9. Denmark
  10. Germany

And the U.S.? The United States moved up one spot over the last few years, now ranking as the 16th best place to be retired.

5 Issues Threatening Retirement Security

You have seen the headlines about a retirement crisis in the United States. Most households have not saved nearly enough.

However, retirement security is a worldwide challenge. If you are worried about your own retirement, know that you are not alone. The entire world population shares your woe.

Why? Natixis cites 5 trends that put tremendous pressure on the financial and medical systems in most countries around the globe.

1. Recession

Despite forecasted doom and gloom, economies are making remarkable recoveries post pandemic in the developed world. However, we are in unprecedented territory.

And, the economic hardship of the last year triggered early withdrawals and missed savings opportunities.

What to think about

Think about how the pandemic has impacted your personal savings balances and contributions. Make sure you on track to the secure future you want.

2. Low interest rates

Low rates have perhaps been good for borrowing which may be a driver of record high stock prices. How low is low? In 2020 16 countries had a negative 5-year average for real interest rates.

However, the persistently low rates have been problematic for many retirees who want more predictable income and growth than the volatile stock market can provide. (See low risk high-return investments.)

Pensions are especially at risk since their portfolio managers may pursue riskier assets to ensure they can meet future payments promised to the pension holders. (If you have a pension, don’t forget to talk with your administrator about the future viability of your payments.)

And, it is important to note that federal pensions like Social Security are impacted negatively by low rates which are a contributing factor to the system being slated to run out of money within the next 7–15 years. (Learn more about when Social Security might run out.)

What to think about:

If you are younger, you might want to plan on a later start date for Social Security benefits. And, everyone needs to consider balancing the risks and rewards of being invested in the stock markets vs. the low returns that fixed-income investments currently offer. (A bucket strategy can be a good solution.)

3. Public debt

Natixis writes, “Public spending on stimulus and aid has been essential to keep the economy afloat, but it also compounds record public debt levels. In the future, debt will present policy makers with difficult decisions about how they address the needs of retirees.

The high levels of debt will likely keep interest rates low. And, public spending may increase — tightening the squeeze on retirement benefits.

What to think about:

It is more important than ever to create and maintain your own comprehensive retirement plan — paying close attention to your own longevity and to your retirement income sources. The NewRetirement Planner can help you.

Government policy makers face tough choices about programs like Social Security and Medicare. Will they raise taxes, raise the qualified retirement age, or cut benefits?

4. Climate impacts on health and wealth

According to Natixis, “Climate change presents tangible health and financial risks to millions of retirees and challenges policymakers around the world.”

WHO projects that climate change is expected to cause 250,000 additional deaths per year between 2030 and 2050. And, the Environmental Protection Agency reports that just extreme heat has increased risk of illness among older adults, especially those with chronic illness.

What to think about:

Use the NewRetirement Planner to model the possibility of increased costs triggered by climate change. Additionally, consider relocation as part of your future plans.

  • Depending on where you live, insurance costs could skyrocket. Many places along the coast or near wildfire prone spaces may not be insurable.
  • Consider heat and cooling costs.
  • Appraise where you intend to retire vis a vis climate security and health related factors.

5. Income inequality

Natixis writes, “The economic divide associated with gender and racial inequality is amplified in retirement, particularly in a world where policy makers and employers have shifted the responsibility for retirement funding onto the shoulders of individuals. As a result, not only is there a pay gap that impedes retirement savings, there is also a critical gap in access to workplace-based retirement savings plans.

While 37% of white households have no retirement savings, 69% of Latino households and 62% of Black households face the same fate.

In the United States, women only make 82% of what men do. This is particularly problematic as women live longer than men, thus requiring more retirement savings, not less.

And, race widens the earning gap. Black women make only 62% of what white men earn and Hispanic women only make 54%. This lifelong income disparity adds up to a major retirement savings and security gap.

What to think about

No matter who you are — but particularly if you are a woman or a person of color — you need to redouble efforts to save for retirement.

How Are the Rankings Compiled? Where Are the Best Places to Be Retired in Each Category?

The Natixis survey creates an overall retirement security score that is based on 18 different performance indicators that are grouped into the following 4 categories:

Will they be able to generate the income they need to sustain themselves through retirement? Can they be confident the financial systems supporting their retirement funding will be resilient through short-term disruptions? Do they have access to the healthcare needed to address the physical challenges of aging? What will their quality of life be like during this vulnerable point of life?

1. Finances in retirement

This category addresses old-age dependency, bank non performing loans, inflation, interest rates, tax pressure, governance, and government indebtedness.

These are the big external financial pressures that can impact an individual’s finances. The study says that:”Finances in Retirement is a particularly important index, as it reflects the strength of a country’s financial system and the ability of the government to provide for its citizens in retirement.”

How does the United States rank? Due to government indebtedness, the U.S. is holding at number 11th on this measure behind Singapore, New Zealand, Australia, Switzerland, Chile, South Korea, Estonia, Ireland, Canada and Iceland.

2. Material well being

This category measures how well retirees can support themselves in retirement and looks at income equality, income per capita, and unemployment.

How does the United States rank? The United States does not even score in the top 25 in this category (coming in at 26th) largely because of income inequality.

The top 10 countries for material well being in retirement include: Norway, Iceland, Czech Republic, Netherlands, Germany, Slovenia, Malta, Austria, Switzerland and Denmark.

3. Quality of life

These are the factors that the study uses to determine quality of life for retirees: happiness, air quality, water and sanitation, biodiversity and habitat, and environmental factors.

How does the United States rank? On these measures, the United States ranks 2rst. The top 10 are: Finland, Norway, Denmark, Sweden, Switzerland, Iceland, United Kingdom, New Zealand, Netherlands, and Austria.

4. Health

The health scores reflect physical wellness and the associated medical costs. This score is specifically based on life expectancy, health expenditure per capita, and non insured health expenditure.

The study notes that “The higher a country’s health expenditure per person, the higher its life expectancy is expected to be.”

How does the United States rank? The United States ranks 16th in the health category.

Why? This is largely because we are a bit of an anomaly in that our life expectancy does not move in line with how much we spend on healthcare per person.

The U.S. finishes first for the health expenditure per capita (we spend the most on healthcare) but only 30th for life expectancy.

Can a U.S. Citizen Retire to One of the Top 5 Countries?

Here is the run down of what it takes to retire to one of the top 5 best places to be retired.

Warning: These are not necessarily the easiest places to retire to from the United States — perhaps it is best if you were born there. (Go check out the best places to retire in the world if you are an American looking to retire abroad.)

1. Iceland

Retiring to Iceland would be a wintry, expensive, and difficult proposition for a U.S. citizen. It is one of the most expensive countries in the world.

EEA/EFTA citizens have a relatively easy time, but Americans will face a lot of bureaucracy and, as part of the application process, you have to prove that you can support yourself while in Iceland. As of 2019, if you don’t have an employment contract, you must have at least 189.875 ISK (about $1500) per month in your bank account. Learn more about how to move to Iceland.

2. Switzerland

Mike Coady, a financial and expatriate expert, lists 10 reasons why Switzerland makes an ideal retirement destination.

Unfortunately, affordability is not one of those reasons.

3. Norway

Retiring to Norway, if it were possible, would be a huge shock — the long winter and endless darkness might make you rethink the plan. In fact, many Norwegians actually spend their retirement in Spain or Portugal where the cost of living is lower (and the elements are more forgiving).

According to LifeinNorway.net, “Unlike some European countries, there is no specific retirement permit available. To live in Norway without working, you must either already have permanent residence, or have enough money to sustain yourself.”

4. Ireland

Ireland holds a special place in the heart of many Americans. And, with rolling green hills, a temperate climate, tremendous natural beauty, and friendly, outgoing people, it could be a retirement delight.

First the good news: U.S. citizens can become an Irish citizen if you, your parents, or grandparents were born there.

The bad news? Everyone else must be able to prove that they won’t be a burden to the state and prove at least $55,000 in annual income. You won’t be allowed to work, must renew your permission every year and other recently updated rules actually make it quite difficult for a U.S. citizen to retire to Ireland.

5. Netherlands

Without European residency, retirement in the Netherlands may be challenging.

Besides, with a cost of living that is higher than the United States it may not be the best place to retire. Although, rents are lower and health insurance is affordable.

Can You Make Your Own Home Be One of the Best Places to Be Retired?

There is no place like home… and that can be true for retirement despite what this study might say.

The trick – no matter where you live – is to have adequate savings and financial resources. And, if you haven’t saved enough, then be willing to make trade offs like working longer, downsizing, cutting expenses, and getting creative in order to achieve financial security.

The NewRetirement retirement planner is the ideal tool for figuring out how to make retirement work for you (at home or abroad). This detailed system gives you almost complete control over all the factors that can contribute to your financial well being.

Start by entering basic information and get some initial feedback on where you stand. Then, add more detail and more accurately estimate for how much you need. Best of all, you can try an infinite number of scenarios and find a way to be retired on your own terms.

If you are interested in moving to one of the best places to be retired or elsewhere, you could try putting in the costs for retiring to your desired destination and compare that to retiring at home. For more ideas for where to retire, explore:

NewRetirement Planner

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