Canada ranks 11th on a worldwide retirement security index, according to an annual rating of 43 industrialized countries, with growing income inequality between rich and poor Canadians being blamed for the drop from last year’s 10th place finish.
The 2017 Global Retirement Index put out by Natixis Global Asset Management looks at four main indicators for retirement security: health, quality of life, material well-being and finances in retirement, with Norway, Switzerland and Iceland finishing one, two and three in this year’s rankings.
Eight of the top ten countries are located in Western Europe, which fared well in the face of a lagging economy in the EU, say the report’s authors.
“Results for countries ranking high in the index, including Germany, Denmark and Sweden, are buoyed by strong performances in the Quality of Life and Material Wellbeing indices,” says the report. “This is despite more lacklustre achievements in the Finances sub-index.”
While Canada’s performance ranked in the top ten for the health and finances categories, income inequality along with declines in employment and income per capita caused the slip in its overall rating. “Canada also saw its Quality of Life score decline due to a poorer showing in the happiness indicator,” says the report. “However, it manages a stronger performance in the environmental factors indicator because of progress in CO2 emissions per GDP.”
Ed Farrington, executive vice president of Retirement for Natixis Global Asset Management, says that the index serves as a reminder of the complex, multi-dimensional nature of the issue. “The population is getting older, making retirement security one of the most pressing social issues facing the world,” says Farrington. “Factors such as increasing longevity, income inequality and the impact of monetary policy on personal savings and pension liabilities are challenging the long-standing assumptions about how individuals plan for and live in retirement.”
The retirement landscape is currently undergoing substantial changes, as more Canadians are staying in the work force longer, bucking the trend from previous generations towards retiring at an earlier age.
For some, continuing to work has become something of a necessity, as they haven’t yet amassed the savings to allow for full retirement. For others, the assets and financial security are there, yet the decision to stay either fully or partially employed stems from a lifestyle choice.
“Freedom 55 is a cliché and right now, Canadians are all over the map on the topic,” says retirement expert and certified financial planner Tom Feigs of Calgary, to Macleans magazine. “Sure, some want to retire early at 55, 60 or 62, but others have no inclination to retire so soon—hoping to continue working for another 10 years or so after age 65, or simply aim to work part-time for a few years to keep busy and stay engaged.”
A poll earlier this year by Maclean’s magazine found that when asked how confident they are that they will have enough savings to retire at the age of 65, a healthy majority of respondents (62 per cent) said they were either “very confident” or “somewhat confident.”