The U.S. might be the richest country in the world, but it doesn’t even rank in the top 10 when it comes to preparing its citizens for their golden years. According to Natixis Global Asset Management’s 2016 Global Retirement Index, the United States ranks 14th for retirement security. Among the leading countries for retirement security identified by the Natixis Index, Northern Europe dominates the top 10 with Norway in the top spot, followed by Switzerland and Iceland. Sweden, Germany, The Netherlands and Austria also landed in the top 10. “Demographics and economics are pressuring the U.S. retirement system,” said David Goodsell, Executive Director of the Durable Portfolio Construction Research Center at Natixis Global Asset Management. “Americans know they need to save more, but they need to start putting plans in place.” The U.S. ranking benefits from high per capita income, the stability of its financial institutions and its low rate of inflation, according to index data compiled by Natixis. In addition, the nation’s unemployment rate has moved lower, continuing a long-term trend. On the negative side, the U.S. also has one of the highest levels of income inequality among developed nations, pulling down its ranking. The U.S. also has a growing ratio of retirees to employment-age adults, which means there are fewer workers to support programs such as Social Security and Medicare, putting increasing pressure those government resources over time. American investors are actually aware of increasing the need for individuals to fund a greater share of retirement. In a survey of investors conducted by Natixis earlier this year, 75% said this responsibility increasingly lands on their shoulders. However, many Americans may be underestimating how much money they need to save in order to retire comfortably. Investors estimate they will need to replace only 63% of their current income when they retire, well short of the 75% to 80% generally assumed by planning professionals, according to Natixis.
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