In 1881, Otto von Bismarck revolutionized the concept of retirement by proposing a state pension for individuals aged 70 and above, encouraging them to cease working. Today, retirement is a multifaceted landscape encompassing not only financial aspects but also health, quality of life, and material well-being. Natixis, a wealth management company, conducted a thorough analysis of 44 nations, producing the 2023 Global Retirement Index. The index, evaluating retirement conditions, is based on four main categories, each with subindices, to provide a holistic perspective on retirement welfare.
Key Categories Analyzed:
Health: Includes per capita spend on healthcare, life expectancy, and non-insured health spend.
Quality of Life: Comprises happiness levels, water and sanitation, air quality, environment, and biodiversity.
Material Well-being: Encompasses per capita income, income equality, and employment levels.
Retirement Finances: Incorporates government debt, old-age dependency, interest rates, inflation, governance, taxes, and bank non-performing loans.
Note: The index focuses on general retirement welfare in a country and does not account for countries popular as retirement destinations due to lower costs of living or favorable weather conditions.
As the world anticipates one-third of its population to be 65 and older by 2050, Natixis’ analysis sheds light on how countries compare in fostering supportive retirement environments. Here are the top 10 countries identified for their exceptional retirement conditions.
The Top 10 Countries for Retirement:
1. Norway (83%)
Health and material well-being contribute to Norway’s top-ranking position.
Noteworthy improvement in life expectancy during the pandemic, reaching 83.3 years at birth.
2. Switzerland (82%)
Maintains a strong position from the previous year, excelling in health and material well-being.
3. Iceland (81%)
Consistent in its ranking, Iceland shines in health and quality of life metrics.
4. Ireland (80%)
Health and material well-being contribute to Ireland’s continued presence among the top countries.
5. Luxembourg (79%)
Climbs two spots, demonstrating strong material well-being and retirement finances.
6. Netherlands (79%)
Jumps two spots with a robust performance in material well-being.
7. Australia (78%)
Retains its position as the highest-ranked non-European country, excelling in retirement finances.
8. New Zealand (77%)
Slips two spots but maintains strong overall retirement conditions.
9. Germany (76%)
Climbs two spots, showcasing improved retirement conditions.
10. Denmark (76%)
Slips one spot but remains a strong contender in retirement welfare.
Additional Highlights:
Australia: Ranks 7th and stands out as the highest-ranked non-European country. Its robust superannuation pension fund system, valued at $3.5 trillion, contributes to strong scores in retirement finances.
France: Sits just outside the top 20 and faced protests in 2023 due to a law raising the retirement age to 64. The move aims to address the old-age dependency ratio, ensuring sustainability in retirement benefits.
Facing the “Silver Tsunami”:
Countries like France and China are implementing measures to address the challenges posed by an aging population. Raising the retirement age is one such strategy, aiming to keep individuals in the workforce longer to sustain retirement benefits. Additionally, immigration is being explored as a means to boost the working-age population and enhance the benefits pool.
Canada, for instance, has actively pursued immigration to counteract a declining working-age population. By 2030, it is projected to have only 3 workers for every retiree, emphasizing the need for strategies to maintain a robust social security system.
Efforts toward increasing productivity through technological advancements and automation are also underway. However, the importance of concurrent re-skilling initiatives is highlighted to prevent net job losses and alleviate pressure on social security systems. The delicate balance between technological progress and workforce readiness emerges as a critical factor in shaping the future of retirement across the globe.
