The pandemic and policy actions taken to mitigate its economic impact will have lasting implications for retirees in the U.S. and other developed nations as they face elevated threats from long-term low interest rates, record levels of public debt, recession, income inequality and climate change, according to Natixis’s analysis of multi-year index trends.
The eighth annual 2020 Global Retirement Index (GRI) focused on various factors that impact finances in retirement, material wellbeing, health and quality of life across 44 countries.
While the U.S. continues to lag many of its European counterparts in the GRI, it improved slightly in the ranking by moving up a couple notches to 16th among the 44 nations. The U.S. rose to 26th from 28th in the material wellbeing category due to a boost in its unemployment indicator, the report noted. It also found the U.S. reduced its income inequality slightly, although it still ranked seventh from the bottom globally in that area despite ranking sixth in income per capita.
In the quality of life category, the U.S. inched down from a ranking of 20th to 21st, but it improved on the happiness of its retirees and held steady on environmental factors, though it still had the ninth-lowest rank in this indicator, the report said.
In the finances in retirement category, the U.S. also slipped one place to 11th place as it scored lower in tax pressure and old-age dependency (the ratio of retirees to working adults). It had the sixth-lowest score for the government indebtedness indicator among all GRI countries.
And in the health category, while the U.S. continues to have the highest score for health expenditure per capita (average amount spent on health per person) and a third ranking for insured health expenditure among all developed countries in the GRI, it dropped out of the top 10 in the overall category to 16th place. The U.S. was dragged down by its 32nd ranking in life expectancy, at 78.54 years.
The top three nations worldwide in the 2020 GRI remained unchanged from 2019, with Iceland at the top, followed by Switzerland and Norway. Also, nine of this year’s top 10 countries have maintained their top 10 status during the past two years.
The nation that departed from last year’s top 10 was Sweden, which dropped from fourth place to 11th. The report attributed the steep decline in part to poor performance within the finances’ category. The report said Sweden’s decreasing five-year average for real interest rates—a concern for retirees on fixed income—moved into negative territory.
Ireland, which climbed from seventh to fourth place, has performed strongly on the insured health expenditure indicator and in its life expectancy indicator, the report said.
The Netherlands climbed to fifth place from 10th, mainly due to improvements in the quality of life sub-index, including stronger scores in environmental factors.