Canada ranks 10th in global Retirement Security

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