The natality rate in many countries around the world has gone down compared to a few decades ago. Though the average age of some developing nations’ population is still young, in many developed nations the average age is going up. The OECD predicts that by 2050, 30% of people worldwide will be aged 65 or over. According to the World Economic Forum (WEF), some countries are struggling with the challenges that come with a rapidly aging population.
The Global Retirement Index (GRI) examines retirement from different, more quantitative perspective. The annual report looks at 44 different countries and ranks them based on their retirement security. The index considers 18 factors, which are grouped into four overarching categories:
- Health: Health spend per capita, life expectancy, and non-insured health spend.
- Quality of Life: Happiness levels, water and sanitation, air quality, other environmental factors, and biodiversity/habitat.
- Material Wellbeing: Income per capita, income equality, and employment levels.
- Finances in Retirement: Government debt, old-age dependency, interest rates, inflation, governance, tax pressure, and bank non-performing loans.
Using these 18 metrics, a score from 0.01 to 1 is determined for each country, which is then converted to a percentage.
Norway achieved the highest score in the Health category, largely because of its high average life expectancy, which is 83 years old, or 9 years longer than the global average. The country also has the highest score of all the countries for Governance, a category gauged by assessing country corruption levels, political stability, and government effectiveness, and is in a three-way tie with Japan and Luxembourg in the Health category.
Second on the list is Switzerland, with an overall score of 80%. It’s the highest-ranked country for environmental factors, and it also has the highest overall score in the Finances in Retirement category.
In terms of regions, North America comes in first place despite the fact no countries in the region made it into the top 10. North America only has two countries included in the ranking: Canada (#15) and the U.S. (#18), which both rank relatively high. As the WEF reports, Western and Eastern Europe (grouped with Central Asia) have more countries to account for, which ultimately lowers their regional average.
As longevity rises and the retirement aged population continues to increase worldwide, many countries are opting to change their pension policies in an effort to encourage people to stay in the workforce longer.
For instance, in 2018, people in the UK could claim their State Pension once they turned 65. By 2028, this age requirement will be raised to 67. Government intervention may not be necessary, as many people around the world are already staying in the workforce beyond the traditional retirement age.