Norway is the best country for retirees
Your future as a retiree will depend in large part on where in the world you live. Switzerland, Iceland, and Norway stand out as the best countries for retirees.
Worried about retirement? According to a French finance company called Natixis, which prepares a comprehensive survey of retirement conditions in 43 countries, you should. Unless, that is, you live in Norway, Switzerland, or Iceland.
The study, called the Global Retirement Index (GRI), assesses everything from state finances to the biodiversity of the country in which you live. That means that being listed at the top of the GRI is about more than money — it ss also about happiness, clean air, and much more.
Not just about money
Both Norway and its neighbouring countries Iceland, Denmark, and Sweden, do well on the GRI index.
Much of this is due to the fact that retirees in the Nordic countries have a generally high quality of life.
If state finances were the only measure of how well future retirees could expect their golden years to play out, countries such as Singapore, Chile, South Korea, and Estonia, would be as high on the GRI as the Scandinavia. But they are not.
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The financial crisis
Ten years ago, the financial crisis shook large parts of the world.
Retirees around the globe are still struggling with the fallout from the crisis. They got — and are likely to continue to get — extremely low interest rates on their savings. Additionally, many retires live in countries that have a lot of debt.
And most importantly, every retiree competes with a growing number of pensioners in their own country for retirement payments that public finances are struggling to pay for.
One million pensioners
The world is getting old. In almost every country aside Africa, an increasing proportion of the population is getting older.
According to UN population estimates, the number of 80-year-olds in the world will almost double betwen now and 2100, when more than 900 million people will be aged 80 or above.
The average life expectancy in the world today is 'only' 72 years. But many children born today will probably reach 100. And hence, there is an ever-increasing proportion of the Earth’s inhabitants that are getting old. As a result, in many countries in the future — including Norway — only two people will be employed for each person who is retired.
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Greece as an extreme example
Few countries have enough money to pay for the enormous retirement costs in their future, despite the fact that most rich and medium well off countries actually owe retirees this money.
Most countries will thus have to rely on new generations to pay ever-increasing pension costs. On top of this, workers will have to pay for ever-expanding health and care programmes for older people.
Greece is an extreme example of the problems that can arise when the state has not planned appropriately. Many Greek retirees today find that their public retirement is only 50 per cent of what it should have been, because the government has to pay off massive debt and did not collect enough taxes.
But other countries also have a great deal of debt. In the last ten years, government debt has increased by 36 per cent in the United States, 38 per cent in Italy, 51 per cent in France, 90 per cent in the United Kingdom, and 147 per cent in Spain, according to the OECD.
Only three countries across the Western world have reduced government debt (as a share of GDP) after the financial crisis ten years ago. These are Norway, Switzerland, and Israel.
Only Norway is saving for the future
Norway is in a unique situation with its vast pension fund, commonly called the "Oil Fund".
The oil fund is so big that it could have repaid Greece's huge sovereign debt more than three times over.
In addition, Norway politicians have been very careful with the fund and retirement savings. Researchers who have studied this give former Norwegian prime minister and current NATO Secretary General Jens Stoltenberg a great deal of credit because he set the stage for the creation of a more sustainable pension system during his tenure that reduces the burden on young people of the future.
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The crisis approaches
Retirees in many other countries are not quite so fortunate.
The retirement crisis is drawing closer at the same time as the proportion of elderly people continues to grow. Until 2007, the crisis was hidden somewhat by years of financial growth and prosperity.
In other countries, which already have public pension schemes similar to Norway, there are more and more young and middle-aged people who wonder whether there will be any money for them in their retirement pension.
In countries with public pension schemes, only six out of ten people under the age of 50 feel safe, according to a survey conducted in a number of countries for Natixis.
As to the question of where their pension could come from, a majority said that they themselves will have to save, or that they may be able to get a pension through a savings contribution to a pension fund via their job.
Many also believe that they must sell the home they own to finance their future retirement.
About 40 per cent believe they will have to ask their children for help. Many future retirees believe that they may even have to ask their children if they can live with them.
Read the Norwegian version of this article at forskning.no
- Natixis: “2018 Global Retirement Index. An in-depth assessment of welfare in retirement around the world.”
- Alex Gray: “This Is How Much Debt Your Country Has per Person”, article from the 2017 World Economic Forum.