U.S. Holds onto Top 20 Retirement Ranking -- Barely


NEW YORK (MainStreet) — The U.S. barely maintained a top 20 ranking in the world in meeting retirement security and needs ¬— finishing behind many European countries with stronger social programs and private pension systems.

For the second year in a row, the U.S. ranked 19th, according to a report from Natixis Global Asset Management, which ranked 150 countries based on health care, finances, economic well being and quality of life factors. The study noted while the U.S. is reaping benefits of an improvingdomestic economy, those positives are moderated by the potential for rising interest rates and inflation, as well as persistent income inequality.

"The responsibility for financial security in retirement is falling even more heavily on individuals than ever before and this trend is likely to continue as government resources become more scarce," said John Hailer, chief executive officer of Natixis in the Americas and Asia. "It is becoming increasingly apparent that to ensure financial security in retirement, individuals need to set personal goals and view planning and saving for retirement as a serious, conscious and strategic pursuit."

The U.S. scored higher in this year's ranking in all four categories than last year's, but could not make up ground on other nations trending higher in areas such as health care and government debt.

For overall retirement security, the U.S. remains behind the majority of countries in Western Europe and Canada, and ahead only of Israel on the list of the top 20 nations. Despite ranking sixth highest in per capita income, the U.S. ranks first in per capita healthcare expenditures, yet 33rd for life expectancy and a remarkable 81st for income inequality.

"There is no one-size-fits-all solution to this serious, growing retirement planning challenge," Hailer said. "The optimal pension system for any country depends on a variety of economic, social, cultural and political factors. However, the policies and practices adopted in some regions that rate highly could hold valuable lessons for other nations, such as the U.S., which need to shore up its retirement system."

In general, top performing nations were modern industrialized economies with important service sectors and good infrastructure. Despite a relatively high tax burden, citizens in those countries still benefit from some of the highest income levels and outstanding universal health care systems, according to the report.

The study stressed that Americans need to take a more proactive, personal role in planning and saving for their retirements and that employers need to be more flexible and open to programs that can help broaden coverage.

"Investors need to think of risk first as they set personal goals and build durable, diversified portfolios," Hailer said. "This approach can help them manage short-term volatility while they pursue long-term growth, and will help keep them invested through a variety of market cycles in order to realize their full savings potential."

So if not the U.S., where do retirees enjoy the greatest financial security?

That would be Europe, which place eight countries in the top ten. That included top-ranked Switzerland, second-ranked Norway (which was ranked first last year), Austria, Sweden, Denmark, Germany, Finland and Luxembourg. Switzerland is known for its strong public and private pension system — in distinct contrast to the U.S., where most Americans rely on their 401(k)s for retirement funds.

Australia and New Zealand were the only non-European countries to make the top ten. All of the countries listed in the bottom 30 are developing countries, and most are in Africa.

New Zealand, along with Iceland and the Republic of Korea, were the most improved in terms of ranking, with each climbing at least ten places from last year to enter the top 20. By contrast, Japan and export-dependent European nations Slovenia and Slovakia were dropped from the top 20.

—Written by Chris Metinko for MainStreet

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