6/29/2012 9:46 PM ET|
US retirement trails other nations'
When compared with similarly wealthy nations, the United States comes up short on its benefits for retirees in a few key areas.
Comparing the fortunes of U.S. retirees with their counterparts in other wealthy nations can be challenging, given differences in public and private benefit programs, the age at which citizens leave the workforce, and various pension reforms of recent years.
Generally, though, many economists view public retirement benefits in the United States as less generous than those in other wealthy nations.
The gaps may be narrowing, though, as other countries -- many of which have long had younger retirement ages -- seek to adjust their systems.
"There's a much richer support network in Europe than there is here," says Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology.
U.S. Social Security Insurance benefits typically replace less than half the income Americans earned on the job, while in Europe, similar benefits often account for at least two-thirds of pre-retirement income, says Gruber.
"We always are neck and neck with the United Kingdom, but other than the U.K., I think we are among the stingiest," adds Alicia Munnell, the director of the Center for Retirement Research at Boston College.
U.S. support for retirees remains below the average for its fellow Organisation for Economic Co-operation and Development member countries at every income level, says Munnell.
US ranking in OECD study
In addition, U.S. public pension spending amounted to 6% of gross domestic product in 2008, less than the 7% average for all OECD countries.
National comparisons depend in part, however, on whether public or private pensions are considered, and on which aspects of retirement benefits are measured.
Among the 34 member OECD countries, the net replacement rate -- retirement income as a percentage of pre-retirement income -- for an average earner is 50% from public pensions alone and nearly 68% when mandatory private pensions are included, according to a 2011 OECD report.
The United States slightly trails the 50% average for public pensions only, at 47.3%, the report showed.
Austria's rate was nearly 90%, Italy's 72%, Hungary's 62%, Portugal's 70%, Germany's 56%, Spain's 85%, France's more than 60%, the United Kingdom's more than 37%, Denmark's 33%, Luxembourg's 94% and the Netherlands' 33.1%. Japan's public pension replacement rate is 40%, Korea's 47.5%.
The United States has no mandatory private pensions. In some of the countries that do, such plans significantly boost the income replacement rate.
Australia's replacement rate, for instance, is 59%, counting public and mandatory private pensions. Denmark's is 90%, Hungary's is 106% and the Netherlands' almost 100%.
Replacement rates assess benefit levels at retirement. The OECD report also measures gross pension wealth -- the value of lifetime flow of retirement income -- and found that average-earning men in member countries received 9.6 times annual earnings, while women, because of longer life-expectancy rates, received 11.1 times annual earnings.
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VIDEO ON MSN MONEY
I know many make so little they can not save, but let me ask you before you attack me for this statement, how many of you eat out more than once a week, I am talking about any meal, how many of you find it a necessity to go to an amusement park at least annual if not more, how many of you go to the movies more than twice a month, how many of you are impulse buyers who go to sales even when you really don't need anything? How many of you refinanced your homes during the early late 1990's and early 2000's multiple times to pay for an expensive trip, buy an RV, a Boat and couple new cars or just to pay off your credit cards, because you just knew the housing market just could not go bust?
Also, the Federal Government and the Federal Reserve are responsible for the decimation of our retirement savings, the interest rate is being held at a historic low for a historic length of time. Thus those who have saved for years find that their retirement savings is dwindling because the interest rate is greatly below the inflation rate.
The only ones who come out ahead are the people with public pensions, they have a high pension and then if the funds in the pension are not enough to pay their inflated pensions they just force the local governments to cough up more money so they won't lose a dime. While the rest of us do not have that protection.
Memo to MSN Money: stop the heavy spam presence on these comment threads or risk becoming an also-ran and ignored web site.
can someone do anything about all the dating spam on these blogs? jesus every other one.
so many pure capitalists that want or get a bailout, is a bailout a capitalist act or a sharing of the wealth or communist act? HMMM......
we are neither capitalist , socialist, or communist, here in America. We are whatever the politicians convince us they need at the moment.
-Complain about those with a retirement plan because after 30 years of drifting through the work force you wake up at 50 too old to start a plan or begin saving leaving you on a social program that could crumble any day.
-Write your Congressman/Woman and ask why CEO'S make billions in bonus cash while their employees who made them that $$$ work as a Walmart return specialist at age 75. It may be too late for you but Its for the "children"...YOUR children.
Funny how 90% choose "A" and go after those who have retirement instead of the Barons who robbed them of theirs...
My late father remained convinced till the day he died that America was the best country in the world despite his dissillusionment over the fact that our bitterest enemies during WWII became our closest allies only 10 years or so after the war. I had the benefit of a broader education in my youth and also became very close to people of other nationalities while in the military service. I was never able to convince him that we were slipping as the world leader in social order.
While it may have been relatively true in the past much of the rest of the world has managed to right themselves after the devastation of a calamitous war and are now surpassing the United States in many categories of measurement from education to health care to pensions and retirement. Even the parity in infant mortality is widening despite the impression that American health care is so great. What is up with that?
One of my dearest friends is from an Eastern nation that has a Socialist rule in place. That person is considering giving up on America and returning to their country of origin simply because they have a better chance at survival there. They retire with a government pension at 55 years of age and receive total medical care for the rest of their lives at no cost. They also each receive a share of the wealth that has come about from a huge discovery of mineral deposits in their country. That would certainly be a rare occurence here. The native people of Alaska who get a share of the oil wealth are the closest we come to that.
Understandably we could never ever afford such a system here simply because of our population numbers but China, who outstrips us in population, even has some benefits that are better than we have here in the United States. Many of our youth who are migrating there for jobs after college graduation are finding that out. There are many who still go on about the U.S. becoming a 'nanny state' but the simple facts are that everyone who lives and tries to work here ultimately contribute something to our economy even it is is only to consume and spend money. As a result our nation and its economy must tolerate even the lazy in order to exist at all. That is just a fact of life.
What the heck is wrong with these innumerate oafs performing this study.......was solvency any part of the study criteria?
Can't really expect much better from msn, they have a socialist agenda to keep pushing.
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