Protecting the Promise
The 2018 Natixis Global Retirement Index (GRI) reveals how the promise of retirement security has been threatened in the decade since the financial crisis—and how 43 nations around the world are being affected.
Top 10 Countries for Retirement Security
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Five key threats to retirement security
Threat #1: Monetary policy that’s perpetually stuck in crisis mode
- Low rates today mean assets may have a lower value in the future — increasing liabilities for pension managers.
- To ensure they have enough to meet those liabilities, pensions have less to work with to fuel long-term growth.
- Many individual investors are forced to annuitize assets at a time when interest rates have never been lower.
- Low returns leave pensioners faced with three choices:
- Live on lower levels of income than anticipated.
- Work longer, if they are able.
- Invest in riskier assets with higher income potential – and greater potential for losses.
Threat #2: The growing weight of public debt
Policy makers have limited funds.
- Retirement benefits, education, and infrastructure compete for a share of those budgets.
- As public debt increases, funding for retirement benefits and other social services decreases.
Threat #3: Old age dependency keeps growing
The world’s population of individuals age 65+ is increasing1
Policy makers have limited tools to stem the tide, few of which are popular:
- Raise the retirement age
- Reduce retirement benefits
- Bring more people into the system via immigration
Threat #4: Climate change
Threat # 5: An eroding quality of life for retirees
- It reduces the tax revenues needed to fund pensions, healthcare, and social services.
- It limits employment opportunities for those who want – or need – to keep working.
Healthcare costs in retirement are also on the rise, which means individuals risk not saving enough and running out of money.In 2014 the US spent $9,403 per person on healthcare, with the next highest country being Luxembourg at $6,812 per person.4
What is the Global Retirement Index?
The Global Retirement Index was compiled in May 2018 by Natixis Investment Managers and CoreData Research. The Index includes International Monetary Fund advanced economies, members of the Organization for Economic Co-operation and Development and the BRIC countries (Brazil, Russia, India and China). The researchers calculated a mean score in each category and combined the category scores for a final overall ranking of the 43 nations studied.
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2 Johnston, Ian. "Spain and Portugal Could Be Hit by 'megadroughts' Lasting 15 Years by 2100, Finds Study" The Independent. May 26, 2017. Accessed August 07, 2018
3 "2017 U.S. Billion-dollar Weather and Climate Disasters: A Historic Year in Context | NOAA Climate.gov" Global Warming Frequently Asked Questions | NOAA Climate.gov. January 08, 2018. Accessed August 07, 2018.
4 “Health expenditure per capita, PPP (constant 2011 international $).” World Bank WDI 2017. Accessed February 8, 2018.
This material is provided for informational purposes only and should not be construed as investment advice.
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Natixis Distribution, L.P. is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.
Published in September 2018
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