A new global study proposes that individuals can take greater control over their long-term financial security with the support of governments, employers and other social partners.
Entitled “A New Social Contract: Empowering Individuals in a Transitioning World,” the study was a joint collaboration of Transamerica Center for Retirement Studies (TCRS) and the Aegon Center for Longevity and Retirement (ACLR). The study is based on findings from the Eighth Annual Aegon Retirement Readiness survey of 14,400 workers and 1,600 retired people from 15 countries across four continents, conducted online in January and February.
Many respondents believe that retirement is an unattainable goal, according to the study. Workers worldwide said they expect they will need to replace 68 percent of their current income in retirement, while only 32 percent feel they are on track to achieving that level of retirement income. For U.S. respondents, the numbers were 67 percent and 23 percent, respectively.
Throughout the world, financial literacy is low, further contributing to respondents’ belief they will not be able to afford retirement, according to the study. Only 27 percent of people in the U.S. and 30 percent globally could correctly answer the “big three” financial literacy questions that test knowledge of compounding interest, inflation and risk diversification.
Catherine Collinson, CEO and president of TCRS, as well as executive director of ACLR, said a new social contract for retirement was necessary to compensate for greater longevity in retirement.
“Working together, we can build ... safety nets that enable everyone to age with dignity,” Collinson said in a press release.
Transamerica Center for Retirement Studies, headquartered in Los Angeles, is a division of Transamerica Institute, a nonprofit, private foundation funded by contributions from Transamerica Life Insurance Company.