According to a Business Wire media release published July 19, 2016, titled, “United States Ranks 14th in retirement security in 2016 Natixis Global Retirement Index,” the United States failed to be ranked even among the top 10 countries for best practices in retirement policy. The research, which is part of the 2016 Global Retirement Index, and was released by Natixis Global Asset Management, examined the key factors that drive retirement security across 43 countries worldwide.
Countries at the top of the list include:
- New Zealand
- The Netherlands
Retirement used to be simple: Individuals worked and saved, employers provided a pension, and payroll taxes funded government benefits, resulting in a predictable income stream for a financially secure retirement,” said John Hailer, CEO of Natixis Global Asset Management in the Americas and Asia. “Demographics and economics have rendered the old model unsustainable, but the leaders in our index are finding innovative ways to adapt to the new reality and provide a blueprint for the rest of the world.”
Why Does the U.S. have Retirement Security Challenges?
A number of issues exacerbate the challenge of retirement security in America, according to the report. Although the U.S. benefits in the rankings because of high per capita income, the stability of financial institutions, a low rate of inflation, and a declining unemployment rank, other factors work against the U.S. ranking.
America has one of the highest levels of income inequality among developed nations, making the goal of saving for retirement beyond the reach of millions. Additionally, the ratio of retirees to working age adults is growing, which results in fewer workers paying into Social Security and Medicare for an ever-increasing number of recipients. Lastly, there is a trend to shift defined-benefit to defined-contribution employer retirement plans that ultimately transfers the burden of retirement financing to individuals.