The fifth Aegon Retirement Readiness Survey, published today, raises the alarm on insufficient progress being made globally to help workers achieve a reasonable living standard when they retire.
This year's Retirement Readiness Survey finds that progress in retirement planning has been 'slow and uneven' across countries.
The report, 'A Retirement Wake-Up Call', provides a trend analysis of the nine countries who have taken part in the annual survey since 2012, with further data revealed this year from a total 15 countries.
Little progress in retirement preparation
In the nine original countries, retirement readiness increased slightly from 5.2 in 2012 to 5.5 in 2016. Across 15 countries, spanning Europe, the Americas, Asia and Australia, retirement readiness is also seen as 'low' at 5.8 of a potential 10.
Carried out by the Aegon Center for Longevity and Retirement (ACLR), in collaboration with the Transamerica Center for Retirement Studies® (TCRS), the report uncovers some interesting dichotomies in global retirement preparations.
India tops retirement readiness league table
India, for example, achieved a 'medium' retirement readiness rating at 7.3, making it the best prepared country surveyed, while Japan saw a marked lack of preparation at just 4.7.
China fell from 6.5 in 2015 to 6.0 in 2016, likely due to acknowledged economic challenges. The US, on the other hand, increased from low to medium-rated, from 6.5 in 2012 to 6.7 in 2016.
"Getting into the habit of saving and consistently saving over time is critical for achieving retirement readiness," says Catherine Collinson, executive director of Aegon Center for Longevity and Retirement, noting that only 26% of workers globally believe they are on course to achieve their retirement income needs.
Support for increased taxes
The report indicates that 31% of those interviewed think governments should increase overall funding for social security through raising taxes without having to reduce the value of individual payments while 15% believe that government should reduce the overall cost of retirement by reducing benefits without having to increase taxes.
Suggestions to raise the retirement age received poor support. Just 20% globally agree that increasing the retirement age in line with increases in life expectancy is a good idea.
Automatic enrolment appeals
The survey reveals that automatically enrolling employees into a retirement plan can prompt non-savers to start. Sixty-five percent of workers globally find the idea of automatic enrolment, based on a contribution level of six percent of annual salary, to be 'very' or 'somewhat appealing'.
"Solving this equation for retirement security must be recognized as a shared responsibility," says Catherine. "No single entity can solve it on its own," she says.
"People expect to live for 20 years in full retirement, but the reality is that retirement may last even longer. Increases in longevity may require individuals needing to work longer in order to adequately fund retirement," Catherine adds
About Aegon Center for Longevity and Retirement
The Aegon Center for Longevity and Retirement (The Center) is a collaboration of experts assembled by Aegon with representation from Europe, the Americas, and Asia. The Center's mission is to conduct research, educate the public, and inform a global dialogue on trends issues, and opportunities surrounding longevity, population aging, and retirement security.
About Transamerica Center for Retirement Studies®
The Transamerica Center for Retirement Studies (TCRS) is a division of the Transamerica Institute, a nonprofit, private foundation. TCRS is dedicated to conducting research and educating the American public on trends, issues, and opportunities related to saving, planning for, and achieving financial security in retirement. Transamerica Institute is funded by contributions from Transamerica Life Insurance Company and its affiliates and may receive funds from unaffiliated third-parties. TCRS and its representatives cannot give ERISA, tax, investment or legal advice. Follow TCRS @TCRStudies.