Canada ranks 10th in global Retirement Security

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Global investments and international finance business symbol with four blue eggs with the maps of the world in a nest as a concept of savings and money management in many regions as Asia North America Europe and Latin America.While it ranks ahead of the United States and the United Kingdom, Canada ranks in tenth place in a global retirement security survey being released today (Tuesday).

Several countries in northern Europe and Scandinavia rank higher in the study by Natixis Global Asset Management. Norway is number one, followed by Switzerland and Iceland. However, because of a revised methodology, Canada’s 2015 ranking is two spots higher than under the 12th place spot it had under the survey’s older methodology. The Natixis Global Retirement Index was introduced in 2013, and bases its overall retirement security scores on four factors affecting the lives of retirees.

A central component is of course finances but three sub-indices measure well being, health and quality of life, providing a more holistic view of retirement than mere financial considerations.

Low interest rates a drawback for Canadian retirees

The index shows Canada has a relatively high per-capital income and low levels of income inequality: It spends “substantial amounts” on health care and provides excellent health insurance coverage, the survey says. However, Canada’s retirees also suffer somewhat from low interest rates and relatively high levels of government debt.

“The former makes it difficult for older Canadians to keep up with increased living costs; the latter could affect the country’s ability to finance social programs over the long term.”

Increasingly, the burden of saving for retirement is falling on the shoulders of Canadian investors. A Natixis investor survey earlier this year found 72% said the costs associated with old age will fall increasingly on individuals rather than government.

And while 72% of Canadians see retirement as their highest financial priority, many are nevertheless underestimating how much money they will need to save in order to retire comfortably. Almost half (45%) are not members of a workplace-based pension plan. Even so, many felt a 60% replacement ratio will suffice, versus 75 to 80% cited by the financial industry. Of course, retirement experts and actuaries like Fred Vettese and Malcolm Hamilton have argued about 50% is sufficient.

Health, longevity and inflation biggest hurdles

The three greatest challenges to financial security in retirement are long-term care and healthcare costs; outliving their money and inflation. Asked how they would overcome an income shortfall, 52% said they will continue to work in retirement.

The complete rankings are shown below:

NATIXIS GLOBAL ASSET MANAGEMENT

2016 Global Retirement Index
Comparison Based on Revised 2015 Rankings

 

2016 Rank

(new methodology)*

Country 2015 Rank

(new methodology)*

2015 Rank

(old methodology)**

1 Norway 1 2
2 Switzerland 2 1
3 Iceland 3 4
4 New Zealand 5 10
5 Sweden 4 6
6 Australia 6 3
7 Germany 12 9
8 Netherlands 7 5
9 Austria 8 8
10 Canada 10 12
11 Finland 9 13
12 Denmark 11 7
13 Luxembourg 13 11
14 United States 15 19
15 Belgium 14 16
16 Ireland 19 32
17 United Kingdom 16 22
18 Czech Republic 20 15
19 Israel 17 23
20 France 18 18
21 Japan 21 17
22 Korea, Rep. 22 14
23 Malta 23 24
24 Slovenia 24 20
25 Singapore 25 30
26 Slovak Republic 26 28
27 Estonia 28 27
28 Italy 27 29
29 Poland 29 33
30 Lithuania 31 40
31 Chile 30 36
32 Latvia 35 51
33 Hungary 37 52
34 Portugal 34 47
35 Mexico 32 42
36 Cyprus 33 39
37 Spain 36 55
38 China 40 72
39 Turkey 39 67
40 Russian Federation 38 50
41 Brazil 41 54
42 Greece 42 76
43 India 43 88

 

 

* — Based on 43 countries

** — Based on 150 countries

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