U.S. Lags in Retirement Security – Are You Surprised?

A recent study by a global asset management firm analyzed the “retirement security” for citizens of 150 different countries. The results were not good for us – the U.S. ranked 19th, right above the UK. Ten western European countries were ranked ahead of us, with Norway in the top spot. On one hand we should not be surprised. On the other hand, is this the outcome we want?

The retirement security study included the following criteria:

  • Health:   Per-capita health spending, life expectancy, availability of physicians and hospital beds, and  uninsured healthcare spending.
  • Material well-being:   Per-capita income, income inequality and unemployment rates.
  • Finances:   Ratio of retirees to workers, inflation rates, interest rates, tax rates, and number of non-performing loans.
  • Quality of life: Happiness and satisfaction of citizens and the quality of the climate and environment.

These appear to be reasonable measures for a large scale study like this.

So why does the U.S. rank so low? Without thinking a lot, you can probably immediately guess two reasons:  health care and our so-called “self-sufficiency.”

Health care continues to be a huge problem for us. The U.S. is far and away the biggest spender worldwide on health care on a per capita basis. The U.S. spends more on healthcare than the next ten highest spending countries combined:  Japan, Germany , France, China, the U.K., Italy, Canada, Brazil, Spain and Australia. 

After reading this, you may be thinking: “That’s OK with me because our healthcare outcomes are so awesome.”  Unfortunately, in most of the significant metrics on healthcare outcomes, e.g. life expectancy, the U.S. also lags well behind other developed countries.

I highly recommend you read a recent article from Time magazine which discusses how profit-making is the driving force in how we are treated (and charged) by our healthcare system. It’s a long article but by the end of it, many of you – even free-market diehards – may be shocked into wondering why the U.S. doesn’t have a single-payer healthcare system.

I must confess that my attitude is changing about the value being delivered by our healthcare industry. Indeed, is it right that the first word that comes to mind with “healthcare” is “industry’? Do we really want the care of our citizens put in the same economic system as automobile manufacturing?

As you consider all of this, I suggest you keep a question in the back of your mind:  What are we really getting for all of the money we are spending on healthcare?  Here is the article.

This brings us to the second issue:  self-sufficiency.

We in the U.S. pride ourselves on individuality, self-sufficiency, and personal responsibility. Is that attitude really working in the realm of retirement security?

It appears not. Fewer of us can rely on pension income. Social Security can replace only a fraction of needed income for most of us and even this is under attack by some in Congress.

Individual retirement savings are supposed to provide the extra income in retirement. But this is where “self-sufficiency” becomes a myth. Way too many of us have either: (1) Not exercised the discipline needed to save enough;  (2) Suffered greatly from our poor economy, i.e., unemployment and investment losses; and/or (3) Seen our employment options and nest eggs devastated by healthcare issues.

This tells me that we like to talk-the-talk on self-sufficiency but in the realm of retirement security, we don’t walk-the-walk.

Either way, compared to the 18 countries ranked ahead of us, we do not have a retirement security safety net to prop us up.

Here is a link to a summary of the report.

I welcome your thoughts in the comments.


Comments

  1. Dean says

    Regrettably I was unable to review the report, but did want to make a few comments.
    What is the financial status of the 18 countries ahead of the USA? Several European countries are realizing they will not be able to continue their current level of support in the future. Does it make sense that what ever we do, it must be sustainable?
    Fifty years ago how many people where covered by pensions as a percentage and how does it compare to today? As a family I have no experience with pensions in the past. We all handled our own finances. If 50% were covered and now 25%, then that may explain some of the problem, but somehow 50% that did not have pensions used to take care of themselves? What else changed?
    Finally, we seem to be in between being an independent society or socialistic in our approach. Which approach has proven to be the most sustainable according to history and raised the most people out of poverty?
    Whenever I read about how everyone is doing and compare it to those I know that are struggling, I can’t help feeling both compassion, for the situation many are in, and at the same time most of those I know that are in bad shape are because of their own actions and poor decisions. That is not always the case and I do live in what I would call a sheltered area, but still makes one wonder if more money is the solution or if something else is changing that we, as a society, need to address? As the saying goes “there is no free lunch”.

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