US Drops to 20th in Natixis Global Retirement Index

Due to high inflation, steep public debt and a sharp decline in U.S. health scores, the U.S. fell two spots in the 2023 Natixis Global Retirement Index. 

The U.S. dropped to 20th from 18th among the 44 countries included but received a higher overall score for retirement security than in 2022. The higher overall score is mainly the result of improvements in employment and wage gains, according to the report. 

Research revealed that optimism on the macro level, however, is not being felt in the everyday lives of retirees and working Americans. 

Natixis created the GRI in 2012 in collaboration with CoreData Research to “establish a global benchmark that incorporates the wide variety of factors essential for people to enjoy a healthy and secure retirement including not only important financial factors but also access to and cost of health care, climate conditions, the state of governance and general happiness of the population.”  

Across four sub-indices, the U.S. ranked as follows in the 2023 GRI: 

• 13th for finances in retirement, down from 11th 
• 21st for material well-being, up from 30th 
• 21st for quality of life, no change 

• 25th for health, down from 17th 

The sharp decline in the health sub-index is largely due to the effect on life expectancy of the COVID-19 pandemic and an increase in drug-related and accident deaths, according to Natixis.  

The U.S. received an overall score of 71% in 2023, up from 69% in 2022. Among the top 25 countries in the index, the U.S. received the second-lowest scores for inflation and government indebtedness.  

For the second consecutive year, Norway held first place, followed in order by Switzerland, Iceland and Ireland—all of which held the same rankings in 2022. The U.K. moved ahead of the U.S. for the first time in five years at 16th, up from 19th. As a whole, nearly all developed countries received a higher overall score for 2023.  

“The common drivers of performance among the top 25 countries on the GRI are higher interest rates as well as improvements in employment levels and progress on environmental policies,” the report stated.  

After surveying affluent, individual investors with at least $100,000 in investable assets, Natixis found that 46% of working respondents in the U.S. said inflation is “killing their dreams for retirement.” Meanwhile, many Americans expressed concern about the potential threat of reduced Social Security benefits, which ranked as their top fear about retirement, the survey found.  

The survey also revealed that 47% of those still working think it will take a miracle to be able to retire securely, up from the 41% who said the same in 2021. 

“It’s important for plan sponsors to recognize the savings challenge facing plan participants,” said David Goodsell, executive director of the Natixis Center for Investor Insight, in an emailed response. “Inflation has left a mark and as we see with investors, many are making tough choices between short term cost increases and their ability to save for long term goals.” 

Besides concerns of Social Security depletion, 77% of Americans surveyed by Natixis said they worry that high levels of public debt will result in reduced retirement benefits. When asked about their greatest fears about retirement, the top answer was a cut in government benefits, which 51% agree would make it difficult to make ends meet financially.  

In addition, rising interest rates should be good news for retirees, creating more favorable conditions to generate steady income from their retirement savings and enhancing the ability of bonds to provide a “risk ballast” in portfolio construction. But even though interest rates have risen, only 22% of retirees and 45% of workers plan to add bonds to their portfolios this year, in part because only 3% of U.S. investors understand how rates affect bond prices and yields, Natixis found.  

According to the survey, 53% of Americans said they accept that they will have to keep working longer than anticipated, and more than one-third of retirees said their finances are tighter than they had expected.  

In the short-term, Goodsell said participants will need more incentives and opportunities to save, like those included in the SECURE 2.0 Act of 2022.  

“Emergency savings, student loan matches, and increased contribution limit are all new tools to use in plan design,” Goodsell said. “The investment offering is another place that can help drive participation and contribution rates. For example, 73% of plan participants in the U.S. say they are likely to up their participation if they have access to sustainable investments.” 

Natixis’s GRI rankings are based on an aggregate of mean scores from 0% to 100% for 18 performance measures in each of four categories—finances in retirement, material well-being, health and quality of life—which were then combined to provide a final overall ranking of the 44 nations studied.