The U.S. ranks 14th for retirement security in Natixis Global Asset Management's 2016 global retirement index, released Tuesday.
The annual index examines the chief factors that drive retirement security, and provides a comparison tool for best practices in retirement policy across 43 countries.
Natixis said in a statement that its index data showed that the U.S. benefits from high per capita income, the stability of its financial institutions and its low rate of inflation. In addition, the nation's unemployment rate has moved lower, continuing a long-term trend.
In contrast to these positive factors, income inequality in the U.S. is one of the highest among developed nations, putting the goal of retirement savings beyond the reach of millions of workers.
Moreover, the country's growing ratio of retirees to employment-age adults means fewer workers support programs such as Social Security and Medicare, which will increase pressure on those government resources over time.
That trend, combined with the broader shift from defined-benefit to defined-contribution employer retirement plans, is transferring the burden of retirement financing to individuals.
American investors understand the growing need for individuals to fund a greater share of retirement, Natixis said, citing a survey it conducted earlier this year. However, many Americans may be grossly underestimating how much money they need to save in order to retire comfortably, it found.
In addition, as much as a third of the American work force does not have access to employer-sponsored savings programs, Natixis said, citing U.S. Department of Labor estimates. And even when they have access to a plan, four in 10 workers contribute less than 5% of their annual salary, a separate Natixis survey found.
U.S. investors identified three big hurdles to financial security in retirement: long-term care and health care costs, inadequate saving and outliving their assets. Asked how they would make up for an income shortfall, two-thirds said they would continue to work in retirement.
"Americans must come to grips with their increasing responsibility for their own retirement security," Ed Farrington, executive vice president of retirement services for Natixis, said in the statement.
"The leading nations in our research are developing effective solutions, but we also need greater commitment by decision makers, engagement by individuals and a willingness to learn from the experiences of other countries around the world."
Natixis said policymakers and employers can learn from four major trends that characterize the top-ranked nations.
Traditional pay-as-you-go models for government retirement benefits have become unsustainable in many Western countries because of an aging work force and longer lifespans. As individuals assume greater responsibility for their retirement funding, public policymakers must ensure that workers have access to individual or work-based savings programs.
Expanded incentives for individuals to save for retirement can help reduce the long-term challenges in providing support for retirees. Favorable tax treatment helps workers put away more money, making it likelier they can take care of their own needs in retirement.
Automatic enrollment in workplace retirement plans engages workers. Good policy would also ensure that workers had the right balance of investments and enough information to help them maximize the benefits of plan participation.
Beyond savings vehicles themselves, retirement security includes consideration for an aging population that will be living on a fixed income. Monetary, fiscal and health care policies all play roles in ensuring that retirees are self-sufficient.
The 2016 index creates an overall retirement security score based on finances in retirement as well three other factors that affect the lives of retirees: health, quality of life and material well-being.
(Check out last year's rankings here: Top 20 Countries for Retirement Security: 2015)
Natixis said this latest edition focused on fewer countries than in the past, mainly ones where retirement was a pressing social and economic issue, including IMF advanced economies, members of the OECD and the BRICs (Brazil, Russia, India and China). The report captured data from several sources, including the World Bank. The researchers calculated a mean score in each category and combined the category scores for a final overall ranking of the 43 nations studied.
Following are the top 25 countries for retirement security. Natixis noted that movements from the 2015 index were not directly comparable owing to this year's revised methodology:
25. Singapore (65%)
Health: 68%
Finances in retirement: 79%
Quality of life: 60%
Material well-being: 56%
24. Slovenia (67%)
Health: 79%
Finances in retirement: 62%
Quality of life: 63%
Material well-being: 67%
23. Malta (69%)
Health: 74%
Finances in retirement: 65%
Quality of life: 66%
Material well-being: 71%
22. South Korea (69%)
Health: 72%
Finances in retirement: 76%
Quality of life: 52%
Material well-being: 79%
21. Japan (70%)
Health: 88%
Finances in retirement: 55%
Quality of life: 64%
Material well-being: 76%
20. France (71%)
Health: 89%
Finances in retirement: 60%
Quality of life: 78%
Material well-being: 60%
19. Israel (71%)
Health: 77%
Finances in retirement: 69%
Quality of life: 78%
Material well-being: 62%
18. Czech Republic (71%)
Health: 71%
Finances in retirement: 67%
Quality of life: 74%
Material well-being: 73%
17. U.K. (71%)
Health: 84%
Finances in retirement: 56%
Quality of life: 80%
Material well-being: 68%
16. Ireland (72%)
Health: 83%
Finances in retirement: 68%
Quality of life: 82%
Material well-being: 58%
15. Belgium (73%)
Health: 82%
Finances in retirement: 61%
Quality of life: 78%
