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What Are the Best Countries for Retirement in 2022?

Having a secure and comfortable retirement is a litmus test for a successful and thriving society. Unfortunately, many countries fail to prioritize the dignity of their citizens as they reach their golden years. To bring attention to the issue of retirement security, a French-American asset management company called Natixis started ranking those countries of the world that get retirement security right in their annual Global Retirement Index (GRI).

For a decade, Natixis has been publishing an annual list of 25 countries with the highest retirement ranking. This index is based on four main scores - health, material well-being, quality of life/environment, and finances in retirement.

“The GRI provides insight into the levers that can drive or diminish the well-being of retirees, and it serves as an important benchmarking tool for policymakers, employers, financial professionals, and individuals,” stated Liana Magner, the head of retirement and institutional in the US for Natixis IM.

Take a look at this table, which summarizes this year’s GRI index, and read what it means below.

Best Countries for Retirement GRI index, 2022
Image source: Business Wire

2022 Global Retirement Ranking Explained

Norway is at the top of the list after 4 consecutive years in third place, whereas Iceland, which has held the first position since 2018, dropped back to the 3rd place. Switzerland has maintained its second place on the Global Retirement Index for the past decade.

The 4th place on the list belongs to Ireland, a country that showcased the biggest increase over the past decade, with its ranking rising to the 4th spot from the 38th in 2012.  

The other leading countries in the ranking are as follows:

5. Australia
6. New Zealand
7. Luxembourg
8. The Netherlands
9. Denmark
10. The Czech Republic.

Best Countries for Retirement two happy seniors indoors

The standouts here are the Czech Republic, which entered the top 10 list for the first time this year, soaring from the 22nd position in 2012. New Zealand is another remarkable gainer, as it climbed from the 34th to the 6th position in the past decade.

But not all countries that ended up on the Global Retirement Index have experienced growth in the past years. The overall market downturn and an increase in prices of fuel, food, housing, and medicine have seriously affected seniors’ finances.

For example, Canada and Germany, within the top 10 part of the list in 2021, fell to No. 15 and 11, respectively, in 2022. Canada’s ranking dropped by five spots due to a lower score for material well-being, population aging, taxes, environmental problems, and a drop in overall happiness among Canadians.

What is Retirement Like for Seniors in the United States?

Best Countries for Retirement Statue of Liberty

The US has landed 18th place on the GRI ranking. The States have the following scores across the main categories:

  • Health - 85%
  • Finances and retirement - 67%
  • Quality of life - 72%
  • Material well-being - 56%.

For comparison, here is a score breakdown of Norway (the 1st place):

  • Health - 91%
  • Finances and retirement - 69%
  • Quality of life - 87%
  • Material well-being - 79%.

Not unlike Canada, the United States experienced a downturn in 2022, dropping from 17th place to 18th out of 44 developed countries. The score of the US declined by 3% to 69% this year. The reason for the drop can be traced back to a decline in material well-being, namely employment and income equality. The US had the 7th lowest score in the material well-being of all countries on the list.

Best Countries for Retirement man holding a 20 dollar bill in front of US flag

Higher government debt, tax pressure, and old-age dependency have also negatively impacted U.S.’s ranking. This means that American retirees today have a harder time facing inflation. “Inflation has been the long-sleeping giant of worries for retirees and is now at the apex of retirement security threats,” stated Dave Goodsell, executive director of the Natixis IM Center for Investor Insight.

Rising old age dependency is another alarming factor for American retirees. In 1950, the old age dependency ratio in the US was just 14.2% (meaning 14 dependent retirees for 100 working-age people). This ratio soared to 28.4% by 2020 and this figure is projected to reach 40% by 2050.

Related article: The 7 Deadliest Mistakes of Financial Planning

The Biggest Retirement Planning Mistakes

Best Countries for Retirement senior reading documents

According to Natixis Investment Managers, several mistakes can negatively impact one’s retirement security. These include:

  • Underestimating your longevity - 61%
  • Miscalculating the effect of inflation - 57%
  • Relying on conservative investing strategies only - 54%
  • Being too optimistic about one’s investment income - 52%
  • Disregarding health care costs when calculating personal finance - 49%.

These challenges are especially felt in countries with a pay-as-you-go retirement system, of which Social Security in the US is an example. Hence, one’s financial planning and investment strategies have to take factors like inflation, growing interest rates, and longevity into account.

H/T: Business Wire, Thinkadvisor

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