It'll take a miracle
The search for retirement security in an insecure world
by Dave Goodsell
In 2021, the world is full of uncertainties for retirees and those saving for retirement. Security is a critical issue — from the immediate challenges of more waves of the pandemic, to longer-term questions about the environment, geopolitics, and inflation.
Retirement is clearly among the top issues for investors. In fact, 40% of investors say “it will take a miracle” to retire securely.1 The 2021 Natixis Global Retirement Index looks at the state of retirement security around the world — and takes a deep dive into four critical concerns for retirement savers, including inflation, interest rates, public debt, and a world of worries.
Download the full report
Discover where your country ranks
Explore GRI rankings around the globe
Americas
Europe / Middle East
Asia / Pacific
Ranking
from 1 to 44
Score
Subindices
2021
2020
2019
Health
Quality of Life
Material Wellbeing
Finances in Retirement
Iceland
1
2021
1
2020
1
2019
83%
2021
82%
2020
83%
2019
86%
87%
85%
85%
86%
86%
92%
87%
91%
70%
71%
72%
Switzerland
2
2021
2
2020
2
2019
81%
2021
82%
2020
82%
2019
88%
89%
88%
87%
87%
86%
75%
75%
78%
75%
77%
77%
Norway
3
2021
3
2020
3
2019
80%
2021
80%
2020
80%
2019
90%
91%
90%
87%
88%
88%
90%
88%
86%
58%
59%
59%
Ireland
4
2021
4
2020
5
2019
78%
2021
79%
2020
77%
2019
87%
90%
87%
80%
80%
78%
77%
75%
71%
71%
72%
72%
Netherlands
5
2021
5
2020
10
2019
76%
2021
77%
2020
76%
2019
87%
88%
87%
80%
83%
80%
87%
83%
82%
56%
57%
57%
New Zealand
6
2021
6
2020
6
2019
76%
2021
77%
2020
76%
2019
84%
84%
83%
82%
83%
83%
66%
64%
62%
75%
78%
79%
Australia
7
2021
7
2020
7
2019
76%
2021
76%
2020
76%
2019
87%
87%
85%
77%
77%
77%
67%
65%
66%
74%
77%
77%
Canada
10
2021
8
2020
8
2019
75%
2021
75%
2020
76%
2019
86%
86%
87%
75%
77%
76%
69%
66%
68%
69%
72%
73%
Denmark
9
2021
9
2020
9
2019
75%
2021
74%
2020
76%
2019
85%
86%
85%
87%
87%
87%
78%
75%
75%
54%
53%
60%
Germany
8
2021
10
2020
13
2019
75%
2021
74%
2020
74%
2019
87%
86%
85%
80%
80%
78%
83%
78%
79%
55%
56%
56%
Sweden
13
2021
11
2020
4
2019
73%
2021
74%
2020
77%
2019
88%
89%
88%
87%
87%
86%
69%
69%
72%
55%
56%
65%
Austria
12
2021
12
2020
14
2019
74%
2021
73%
2020
73%
2019
85%
85%
84%
83%
82%
82%
77%
76%
75%
54%
55%
54%
Luxembourg
11
2021
13
2020
11
2019
74%
2021
73%
2020
75%
2019
90%
90%
91%
80%
79%
78%
59%
60%
60%
Czech Republic
14
2021
14
2020
15
2019
73%
2021
73%
2020
72%
2019
73%
73%
72%
68%
68%
67%
86%
83%
83%
65%
67%
69%
Finland
15
2021
15
2020
12
2019
72%
2021
73%
2020
75%
2019
82%
83%
83%
89%
89%
88%
69%
68%
68%
55%
55%
62%
United States
17
2021
16
2020
18
2019
72%
2021
72%
2020
70%
2019
83%
85%
86%
71%
72%
70%
65%
64%
58%
69%
71%
71%
United Kingdom
18
2021
17
2020
16
2019
72%
2021
72%
2020
72%
2019
82%
83%
83%
83%
84%
81%
69%
68%
69%
56%
56%
56%
Israel
19
2021
18
2020
17
2019
71%
2021
71%
2020
71%
2019
80%
80%
79%
72%
72%
71%
67%
65%
66%
67%
68%
70%
Slovenia
16
2021
19
2020
21
2019
72%
2021
71%
2020
69%
2019
80%
80%
79%
67%
67%
63%
82%
77%
72%
61%
62%
65%
Malta
20
2021
20
2020
19
2019
70%
2021
71%
2020
69%
2019
76%
78%
75%
63%
65%
63%
79%
76%
76%
65%
66%
66%
Belgium
21
2021
21
2020
20
2019
69%
2021
70%
2020
69%
2019
83%
85%
83%
74%
76%
74%
76%
73%
73%
50%
51%
51%
Korea, Republic
23
2021
22
2020
24
2019
67%
2021
68%
2020
69%
2019
77%
76%
72%
56%
60%
56%
65%
62%
74%
73%
75%
75%
Japan
22
2021
23
2020
23
2019
68%
2021
68%
2020
69%
2019
90%
91%
90%
66%
67%
64%
73%
70%
72%
49%
49%
55%
Estonia
24
2021
24
2020
26
2019
67%
2021
67%
2020
65%
2019
67%
67%
65%
66%
65%
61%
65%
64%
62%
71%
74%
71%
France
25
2021
25
2020
22
2019
67%
2021
67%
2020
69%
2019
89%
89%
89%
78%
78%
76%
59%
59%
61%
49%
49%
55%
Russian Federation
38
2021
38
2020
38
2019
48%
2021
49%
2020
46%
2019
38%
41%
40%
44%
47%
45%
56%
54%
52%
56%
55%
47%
China
39
2021
39
2020
39
2019
48%
2021
47%
2020
42%
2019
49%
48%
49%
34%
34%
30%
47%
45%
32%
67%
68%
69%
Brazil
43
2021
43
2020
43
2019
34%
2021
36%
2020
36%
2019
52%
54%
55%
59%
61%
57%
8%
8%
10%
57%
58%
56%
India
44
2021
44
2020
44
2019
9%
2021
9%
2020
10%
2019
3%
3%
3%
3%
3%
3%
15%
14%
16%
63%
64%
60%
Singapore
28
2021
28
2020
30
2019
64%
2021
64%
2020
62%
2019
81%
81%
77%
50%
50%
47%
52%
52%
52%
77%
80%
79%
Italy
31
2021
30
2020
29
2019
62%
2021
63%
2020
62%
2019
81%
82%
81%
72%
72%
68%
49%
49%
51%
53%
54%
53%
Spain
32
2021
32
2020
31
2019
60%
2021
60%
2020
62%
2019
82%
82%
81%
74%
74%
71%
35%
35%
40%
61%
62%
63%
Mexico
37
2021
37
2020
37
2019
51%
2021
51%
2020
53%
2019
45%
45%
52%
56%
58%
58%
42%
41%
42%
63%
64%
64%
Colombia
40
2021
40
2020
42
2019
45%
2021
46%
2020
38%
2019
61%
57%
49%
59%
62%
59%
19%
19%
11%
62%
65%
65%
Portugal
26
2021
26
2020
28
2019
65%
2021
65%
2020
62%
2019
75%
76%
75%
65%
66%
60%
61%
58%
55%
60%
61%
61%
Poland
27
2021
27
2020
27
2019
65%
2021
64%
2020
63%
2019
64%
64%
63%
57%
58%
57%
76%
71%
68%
63%
65%
66%
Slovak Republic
29
2021
29
2020
25
2019
63%
2021
63%
2020
65%
2019
65%
65%
64%
63%
64%
61%
74%
73%
68%
53%
53%
67%
Cyprus
30
2021
31
2020
33
2019
63%
2021
62%
2020
59%
2019
70%
66%
65%
64%
65%
60%
58%
60%
52%
59%
59%
59%
Hungary
33
2021
33
2020
32
2019
58%
2021
59%
2020
60%
2019
57%
58%
58%
55%
57%
51%
75%
72%
70%
49%
50%
60%
Chile
34
2021
34
2020
35
2019
58%
2021
58%
2020
55%
2019
68%
68%
66%
60%
62%
63%
37%
37%
29%
73%
76%
76%
Lithuania
35
2021
35
2020
34
2019
57%
2021
57%
2020
58%
2019
55%
58%
53%
62%
62%
60%
56%
52%
51%
55%
55%
68%
Latvia
36
2021
36
2020
36
2019
54%
2021
53%
2020
55%
2019
49%
49%
49%
60%
60%
57%
53%
52%
49%
53%
53%
66%
Greece
41
2021
41
2020
41
2019
41%
2021
41%
2020
39%
2019
68%
70%
70%
60%
60%
52%
15%
15%
14%
46%
45%
45%
Turkey
42
2021
42
2020
40
2019
39%
2021
40%
2020
42%
2019
59%
59%
54%
34%
38%
37%
26%
27%
34%
43%
44%
45%
What is the Global Retirement Index?
The Global Retirement Index (GRI) is a multi-dimensional index developed by Natixis Investment Managers and CoreData Research to examine the factors driving retirement security and to provide a comparison tool for best practices in retirement policy.
The index includes International Monetary Fund (IMF) advanced economies, members of the Organization for Economic Cooperation and Development (OECD) 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 44 nations studied.
How individuals feel about retirement security
At what age do you plan to retire?
According to our survey, the younger investors are, the younger they think they’ll retire.
Global
Generation Y
Generation X
Baby Boomers
62
60
62
65
How long do you believe you’ll live in retirement?
With an average lifespan of nearly 79 years,* investors believe they’ll live 22+ years in retirement. Since this is just the average, many people will, in fact, live longer.
Global
Generation Y
Generation X
Baby Boomers
22 years
23 years
22 years
22 years
I accept I’ll have to work longer than I anticipated
Many individuals say they may need to work longer than planned, but circ*mstances may prevent them from being able to.
Global
Generation Y
Generation X
Baby Boomers
60%
66%
61%
51%
Given certain challenges, I think it's going to take a miracle to retire securely
40% of individuals say it’ll take a miracle for them to be able to retire securely.
Global
Generation Y
Generation X
Baby Boomers
40%
46%
41%
33%
* UN DESA & Gapminder. (August 31, 2019). Life expectancy (from birth) in the United States, from 1860 to 2020 [Graph]. In Statista. Retrieved September 02, 2021, from https://www.statista.com/statistics/1040079/life-expectancy-united-states-all-time/
Source: Natixis Investment Managers, Global Survey of Individual Investors conducted by CoreData Research, March-April 2021. Survey included 8,550 investors in 24 countries.
4 key concerns for
global retirement security
Inflation: A real-world lesson in purchasing power.
Economic recovery has brought the first real inflation in 13 years. Economists may see it as transitory, but investors have been reminded that the past decade could look more like the exception than the rule.
The concern about inflation has been front and center in the recovery, as growth runs into supply chain disruptions, shortages, and consumers coming back to the mall with cash in hand. Investors should understand just how even a small increase in inflation can affect their purchasing power over time.
How does inflation erode purchasing power?
Even 2% inflation can add up. Click to see how the sticker price of this car would increase over the years.
2020
2030
2040
2050
$38,960*
$47,492
$57,893
$70,571
*National Automobile Dealers Association. “New Vehicle Average Selling Price in The United States from 2016 to 2020 (in 1,000 U.S. Dollars).” Statista Inc., 11 May 2021, https://www.statista.com/statistics/274927/new-vehicle-average-selling-price-in-the-united-states/
Low rates: Boon to customers. Bust for retirees.
Interest rates have been low since 2009. But they went even lower during the pandemic as policy makers moved to shore up local economies. Low rates may have been good for growth and good for consumers, but the environment has made it difficult for retirees who need to generate income.
Interest rates were low. And moved lower.
OECD (2021), Long-term interest rates (indicator). doi: 10.1787/662d712c-en (Accessed on 02 August 2021)
It’s important for investors to understand how low rates can impact their retirement income, leaving them open to market drawdown and sequence of return risk.
How do low rates affect retirement income?
As investors near retirement, they generally have more conservative portfolios, which often hold more bonds than stocks.
When interest rates are low, the bonds will generate less income.
As a result, investors often turn to riskier assets, like stocks, to make up the difference.
But stocks give them greater risk exposure — including market drawdown and sequence of return risk.
When you earn your returns matters
With sequence of returns risk, it's not simply about gains and losses as the market moves. Timing is critical. When those gains and losses happen can have a big impact on your ability to preserve capital. For example, if you take a loss early on, it's harder to make up the difference. And if you generate returns early on, you're starting out ahead. Here's one example of what that could look like over 3 years for a portfolio of $450,000 (the median portfolio value for those surveyed).
Beginning portfolio value: $450,000
Starting out with a gain
Year 1
Year 2
Year 3
Returns
10%
10%
-10%
Balance
$495,000
$500,500
$414,450
Income withdrawal*
$40,000
$40,000
$40,000
Ending Balance
$455,000
$460,500
$374,450
Starting out with a loss
Year 1
Year 2
Year 3
Returns
-10%
10%
10%
Balance
$405,000
$401,500
$397,650
Income withdrawal*
$40,000
$40,000
$40,000
Ending Balance
$365,000
$361,500
$357,650
Both these scenarios result in an average 8.9% annual rate of return after 3 years. However, the sequence of returns makes a big difference in how much money you’ve actually earned. In this example, when you start out with a gain, you end up with $374,450 after 3 years. But when you start out with a loss, you wind up with $357,650 – a difference of $16,800.
*Withdrawals occur at end of each year
Public debt: Will retirees have to foot the bill?
Massive stimulus spending was a critical policy tool that helped keep the public health crisis from becoming a global economic crisis. But record spending in 2020 and 2021 is the topper on debt pressures that have been building for decades. Investors are worried about what it means for their public retirement benefits.
Top 25 countries with the most public debt
General government debt total, % of GDP, 2020 or latest available % of GDP
0 50 100150200250
Greece
Japan
USA
Portugal
Italy
Spain
Great Britain
Belgium
Canada
France
Slovenia
Hungary
Australia
0 50 100150200250
0 50 100150200250
Austria
Colombia
Finland
Slovakia
Poland
Israel
Ireland
Germany
Sweden
Netherlands
Mexico
Denmark
0 50 100150200250
OECD (2021), General government debt (indicator). doi: 10.1787/a0528cc2-en (Accessed on 02 August 2021)
High levels of public debt could mean tough choices down the road for policy makers
They could be forced to make difficult decisions about spending on government programs, including public retirement benefits, such as:
Increasing
taxes
Taking a bigger bite out of retirees’ fixed income reduces their purchasing power.
Raising the
retirement age
Individuals already say they want to retire early; nobody wants to be told they have to work longer.
Cutting benefit
payments
A move which resets income planning assumptions for millions of retirees and pre-retirees.
A world of worry: Into the great unknown of retirement.
Beyond the economic pressures, individuals share a broad range of worries about retirement. From employment to health to income inequality, they have a lot on their minds.
Many times retirement is not a choice. Unforeseen events like a late career layoff, health problems, or family care needs can take people out of the workforce and disrupt their retirement plans.
Healthcare is a particular concern. Seven in ten say they are worried that the costs of healthcare and long-term care will severely impact their financial security in retirement.
Income inequality is another issue on their minds, because if you earn less while working, you’ll have less to save — and less to draw from in retirement. The good news is that the dialogue around it seems to be getting through to the public.
Beyond finances, what are individuals worried about around retirement security?
7 out of 10 worry healthcare and long-term care costs will severely impact financial security in retirement.
71% of investors believe income inequality has a detrimental effect on retirement security.
Nearly half of individuals worry they won't stay employed as long as they like.
Source: Natixis Investment Managers, Global Survey of Individual Investors conducted by CoreData Research, March-April 2021. Survey included 8,550 investors in 24 countries.
What's needed to achieve
retirement security?
The risks presented by inflation, interest rates, and public debt, and the financial challenges of employment and healthcare are great. And they come at a time when many retirement systems are shifting from traditional pensions to defined contribution solutions.
As a result, eight in ten individuals know it is increasingly their responsibility to fund retirement. So, how can retirement investors tackle their goal of a more secure retirement? Individuals surveyed say their employer is a first line of defense in the process:
- 80% of individuals (including 77% of business owners in our survey) believe companies should be responsible for helping them achieve a secure retirement.
- 80% of individuals say they would be more inclined to work for a company that offered matching contributions to their retirement savings plan.
- Seven in ten say having access to investments that reflect their personal values would motivate them to save more for retirement.
- 62% of individuals surveyed globally say they need professional advice selecting investments in their retirement plan. (And this is a group where more than half rate their investment knowledge as strong, and 62% say they understand the investments available in their retirement plan.)
In the end, society is shifting the responsibility for a more secure retirement to individuals. More than three-quarters (78%) of individuals say that the responsibility of funding for retirement is falling squarely on their shoulders. It’s important to help them make smart decisions to fulfill that responsibility. So, maybe it won’t take a miracle, but for many, it will definitely take a commitment from individuals, employers, and policy makers to achieve retirement security.
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Global retirement security is a worthy goal. If stakeholders live up to their roles and responsibilities, it can be within reach. To get the full details on where your country ranks — and learn more about the key concerns around global retirement security — download our full report.
Download the full report
1 Source: Natixis Investment Managers, Global Survey of Individual Investors conducted by CoreData Research, March-April 2021. Survey included 8,550 investors in 24 countries.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed are as of September 2021 and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.
All investing involves risk, including the risk of loss. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
Natixis Distribution, LLC 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.
3713853.1.1
As a seasoned expert in retirement planning and financial security, I've delved into numerous global retirement indices, including the Natixis Global Retirement Index (GRI), to gain an in-depth understanding of the challenges and concerns faced by individuals worldwide. My extensive knowledge and hands-on experience in the field allow me to provide insights into the complex dynamics surrounding retirement security.
The article "It'll take a miracle: The search for retirement security in an insecure world" by Dave Goodsell touches upon crucial aspects of retirement planning and outlines four key concerns: inflation, low interest rates, public debt, and the broader uncertainties in the world. Let's break down each concept:
-
Inflation: The article emphasizes the impact of inflation on purchasing power, using real-world examples such as the rising cost of a car over the years. Even a seemingly small inflation rate can significantly erode the value of savings over time, posing a challenge for retirees.
-
Low Interest Rates: It discusses the challenges posed by persistently low interest rates, particularly during the COVID-19 pandemic. While low rates may benefit consumers and economic growth, they create difficulties for retirees relying on income generated from their investments. The concept of sequence of returns risk is explained, highlighting the importance of the timing of market movements for retirees.
-
Public Debt: The article touches on the massive stimulus spending in response to the pandemic, leading to concerns about high levels of public debt. Investors worry about the potential consequences, such as increased taxes, a higher retirement age, or cuts to benefit payments, which could impact retirees' financial security.
-
Broader Worries: Beyond economic concerns, the article explores a range of worries individuals have about retirement, including healthcare costs, income inequality, and unforeseen events disrupting retirement plans. It underscores the multifaceted nature of retirement security beyond financial aspects.
-
Global Retirement Index (GRI): The GRI, developed by Natixis Investment Managers and CoreData Research, is a comprehensive index that assesses retirement security factors. It includes indicators from the International Monetary Fund (IMF) advanced economies, members of the Organization for Economic Cooperation and Development (OECD), and the BRIC countries (Brazil, Russia, India, and China). The index provides a mean score in various categories, contributing to an overall ranking of 44 nations studied.
-
Investor Sentiments and Survey Data: The article incorporates survey data from the Natixis Investment Managers Global Survey of Individual Investors conducted by CoreData Research in March-April 2021. It explores investor sentiments, such as the belief that achieving a secure retirement might require a miracle, the age at which individuals plan to retire, and concerns about working longer than anticipated.
-
Recommendations for Achieving Retirement Security: The article concludes by addressing the evolving landscape of retirement systems and the increasing responsibility placed on individuals. It suggests that employers, professional advice, and investments aligned with personal values can play crucial roles in helping individuals achieve a more secure retirement.
In summary, my expertise allows me to navigate the complexities of retirement planning, providing a comprehensive understanding of the challenges outlined in the article and offering valuable insights for individuals seeking retirement security in an uncertain world.
