10 Countries Where Citizens Enjoy the Best Retirement

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Editor's Note: This story originally appeared on NewRetirement.

So, which country’s citizens enjoy the best retirement?

According to the Global Retirement Index Report from Natixis Global Asset Management, the citizens from these 10 nations rank highest:

  1. Iceland
  2. Switzerland
  3. Norway
  4. Ireland
  5. Netherlands
  6. New Zealand
  7. Australia
  8. Canada
  9. Denmark
  10. Germany

And the U.S.? The United States moved up one spot over the last few years, now ranking as the 16th best place to be retired.

Keep reading to learn more about how these rankings are calculated, where the U.S. stands on key factors and whether you can retire to one of the top five countries of the top 10 listed above.

5 Issues Threatening Retirement Security

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You have seen the headlines about a retirement crisis in the United States. Most households have not saved nearly enough.

However, retirement security is a worldwide challenge. If you are worried about your own retirement, know that you are not alone. The entire world population shares your woe.

Why? Natixis cites five trends that put tremendous pressure on the financial and medical systems in most countries around the globe.

1. Recession

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Despite forecasted doom and gloom, economies are making remarkable recoveries post-pandemic in the developed world. However, we are in unprecedented territory.

And, the economic hardship of the last year triggered early withdrawals and missed savings opportunities.

What to think about:

Think about how the coronavirus pandemic has impacted your personal savings balances and contributions. Make sure you are on track to the secure future you want.

2. Low interest rates

Daughter looking at computer over the shoulder of her elderly mother.
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Low rates have perhaps been good for borrowing which may be a driver of record high stock prices. How low is low? In 2020, 16 countries had a negative five-year average for real interest rates.

However, the persistently low rates have been problematic for many retirees who want more predictable income and growth than the volatile stock market can provide.

According to Natixis, for every 25-basis-point cut in rates, there is a $25 cut in income earned on $10,000 in savings. And, it has been challenging for investors to safely replace that income shortfall.

Pensions are especially at risk since their portfolio managers may pursue riskier assets to ensure they can meet future payments promised to the pension holders. (If you have a pension, don’t forget to talk with your administrator about the future viability of your payments.)

And, it is important to note that federal pensions like Social Security are impacted negatively by low rates which are a contributing factor to the system being slated to run out of money within the next seven to 15 years. (Learn more about when Social Security might run out.)

What to think about:

If you are younger, you might want to plan on a later start date for Social Security benefits. And, everyone needs to consider balancing the risks and rewards of being invested in the stock markets versus the low returns that fixed-income investments currently offer. (A bucket strategy can be a good solution.)

3. Public debt

Money from the government
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Nataxis writes, “Public spending on stimulus and aid has been essential to keep the economy afloat, but it also compounds record public debt levels. In the future, debt will present policymakers with difficult decisions about how they address the needs of retirees.”

The high levels of debt will likely keep interest rates low. And, public spending may increase — tightening the squeeze on retirement benefits.

What to think about:

It is more important than ever to create and maintain your own comprehensive retirement plan — paying close attention to your own longevity and to your retirement income sources.

Government policymakers face tough choices about programs like Social Security and Medicare. Will they raise taxes, raise the qualified retirement age, or cut benefits?

4. Climate impacts on wealth and health

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According to Natixis, “Climate change presents tangible health and financial risks to millions of retirees and challenges policymakers around the world.”

The World Health Organization projects that climate change is expected to cause 250,000 additional deaths per year between 2030 and 2050. And, the U.S. Environmental Protection Agency reports that extreme heat alone has increased the risk of illness among older adults, especially those with chronic illness.

What to think about:

Use the NewRetirement Planner to model the possibility of increased costs triggered by climate change. Additionally, consider relocation as part of your future plans.

  • Depending on where you live, insurance costs could skyrocket. Many places along the coasts or near wildfire-prone spaces may not be insurable.
  • Consider heat and cooling costs.
  • Appraise where you intend to retire vis a vis climate security and health-related factors.

5. Income inequality

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Nataxis writes, “The economic divide associated with gender and racial inequality is amplified in retirement, particularly in a world where policymakers and employers have shifted the responsibility for retirement funding onto the shoulders of individuals. As a result, not only is there a pay gap that impedes retirement savings, there is also a critical gap in access to workplace-based retirement savings plans.”

While 37% of white households have no retirement savings, that fate looms for 69% of Latino households and 62% of Black households.

In the United States, women make only 82% of what men do. This is particularly problematic as women live longer than men, thus requiring more retirement savings, not less.

And, race widens the earning gap. Black women make only 62% of what white men earn, and Hispanic women only make 54% of white men’s pay. This lifelong income disparity adds up to a major retirement savings and security gap.

What to think about:

No matter who you are — but particularly if you are a woman or a person of color — you need to redouble efforts to save for retirement.

How Are the Rankings Compiled? Where Are the Best Places to Be Retired in Each Category?

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The Natixis survey creates an overall retirement security score that is based on 18 different performance indicators that are grouped into the following four categories:

Will they be able to generate the income they need to sustain themselves through retirement? Can they be confident the financial systems supporting their retirement funding will be resilient through short-term disruptions? Do they have access to the health care needed to address the physical challenges of aging? What will their quality of life be like during this vulnerable point of life?

1. Finances in retirement

Stressed retiree doing budgeting and paying bills
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This category addresses old-age dependency, bank nonperforming loans, inflation, interest rates, tax pressure, governance, and government indebtedness.

These are the big external financial pressures that can impact an individual’s finances. The study says that: “Finances in Retirement is a particularly important index, as it reflects the strength of a country’s financial system and the ability of the government to provide for its citizens in retirement.”

How does the United States rank? Due to government indebtedness, the U.S. is holding at No. 11 on this measure behind Singapore, New Zealand, Australia, Switzerland, Chile, South Korea, Estonia, Ireland, Canada and Iceland.

2. Material well-being

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This category measures how well retirees can support themselves in retirement and looks at income equality, income per capita, and unemployment.

How does the United States rank? The United States does not even score in the top 25 in this category (coming in at 26th) largely because of income inequality.

The top 10 countries for material well-being in retirement include: Norway, Iceland, Czech Republic, Netherlands, Germany, Slovenia, Malta, Austria, Switzerland and Denmark.

3. Quality of life

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These are the factors that the study uses to determine quality of life for retirees: happiness, air quality, water and sanitation, biodiversity and habitat, and environmental factors.

How does the United States rank? On these measures, the United States ranks 20th. The top 10 are: Finland, Norway, Denmark, Sweden, Switzerland, Iceland, United Kingdom, New Zealand, Netherlands, and Austria.

4. Health

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The health scores reflect physical wellness and the associated medical costs. This score is specifically based on life expectancy, health expenditure per capita, and noninsured health expenditure.

The study notes that “The higher a country’s health expenditure per person, the higher its life expectancy is expected to be.”

How does the United States rank? The United States ranks 16th in the health category.

Why? This is largely because we are a bit of an anomaly in that our life expectancy does not move in line with how much we spend on health care per person.

The U.S. finishes first for the health expenditure per capita (we spend the most on health care) but only 30th for life expectancy.

Can a U.S. Citizen Retire to One of the Top 5 Countries?

Tourist couple walking on street in Europe.
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Here is the rundown of what it takes to retire to one of the top five best places to be retired.

Warning: These are not necessarily the easiest places to retire to from the United States — perhaps it is best if you were born there. (Go check out the best places to retire in the world if you are an American looking to retire abroad.)

1. Iceland

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Retiring to Iceland would be a wintry, expensive, and difficult proposition for a U.S. citizen. It is one of the most expensive countries in the world.

Citizens from the European Economic Area (EEA) or the European or the European Free Trade Association (EFTA) have a relatively easy time, but Americans will face a lot of bureaucracy. And, as part of the application process, you have to prove that you can support yourself while in Iceland. As of 2019, if you don’t have an employment contract, you must have at least 189.875 ISK (about $1,500) per month in your bank account. Learn more about how to move to Iceland.

2. Switzerland

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Mike Coady, a financial and expatriate expert, lists 10 reasons why Switzerland makes an ideal retirement destination.

Unfortunately, affordability is not one of those reasons.

3. Norway

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Retiring to Norway, if it were possible, would be a huge shock — the long winter and endless darkness might make you rethink the plan. In fact, many Norwegians actually spend their retirement in Spain or Portugal where the cost of living is lower (and the elements are more forgiving).

According to LifeinNorway.net, “Unlike some European countries, there is no specific retirement permit available. To live in Norway without working, you must either already have permanent residence, or have enough money to sustain yourself.”

4. Ireland

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Ireland holds a special place in the heart of many Americans. And, with rolling green hills, a temperate climate, tremendous natural beauty, and friendly, outgoing people, it could be a retirement delight.

First the good news: U.S. citizens can become an Irish citizen if you, your parents, or grandparents were born there.

The bad news? Everyone else must be able to prove that they won’t be a burden to the state and prove at least $55,000 in annual income. You won’t be allowed to work, must renew your permission every year and other recently updated rules actually make it quite difficult for a U.S. citizen to retire to Ireland.

5. Netherlands

Netherlands and tulips
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Without European residency, retirement in the Netherlands may be challenging.

Besides, with a cost of living that is higher than the United States it may not be the best place to retire. Although, rents are lower and health insurance is affordable.

Can You Make Your Own Home Be One of the Best Places to Be Retired?

Retiree in Florida
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There is no place like home … and that can be true for retirement despite what this study might say.

The trick is to have adequate savings and financial resources and — if you haven’t saved enough — to be willing to make trade-offs like working longer, downsizing, cutting expenses, and getting creative in order to achieve financial security.

If you are interested in moving to one of the best places to be retired or elsewhere, you could try figuring the costs for retiring to your desired destination and compare that with retiring at home. For more ideas for where to retire, explore:

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