Seventeenth in math, 20th in science, and just behind Estonia in economic freedom. Jeff Daniels’ fictional rant from The Newsroom claims the United States ranks 178th in infant mortality, a stat that seems to make certain people squeal, usually more lefty types advocating for a single-payer health care system. A closer look at the numbers, however, reveals a much different story, as it usually does.
And so it is with the results of the 2016 Global Retirement Index released last week by Natixis Global Asset Management, which elicited concern but not surprise. The indispensable Richard Eisenberg, writing in Forbes, does us all a favor and takes a hard look behind the numbers.
To stipulate, I’m not at all suggesting Natixis skewed numbers to get a predetermined result or that the findings are even wrong. There is much in the survey with which we agree and find value. I simply question some of the variables included, as does Eisenberg.
For those not in the know, the United States scored 14th (14th!) in “retirement security.” A definition for the purposes of the survey included factors like health, longevity, finances, income per capita and unemployment, among many others.
Problems potentially arise with the inclusion of some of the softer sciences, and well as the hard sciences that have been hopelessly (and politically) corrupted. Examples include “income inequality” for the former and “climate change” for the latter. How would climate change affect retirement security, you might rightly wonder, and can a scientifically-supportable connection be made?
“The quality of the environment has a direct impact on health and state of mind,” Ed Farrington, executive vice president of retirement strategies at Natixis, told Eisenberg.
And, of course, 401(k)s we’re mentioned, which Eisenberg coyly referred to as “our less-than-ideal employer-based retirement plan system.”
“In many of the Top 10 countries, a higher percentage of their populations than ours had access to employer-sponsored retirement plans, tax incentives to invest in them and automatic enrollment in the plans,” he wrote. “Millions of U.S. workers lack access to 401(k)-type plans — roughly 50 percent of them, by some estimates.
“And many Americans who have the plans don’t manage them especially well: they contribute very little and tap them too often before retirement through loans and withdrawals,” Eisenberg bemoaned.
He added that No. 1 ranked Norway, by contrast, has had a compulsory workplace savings program since 2006. In Iceland, everyone between age 16 and 70 must have 12 percent contributed to their retirement plans — 4 percent from the employee and 8 percent from the employer.
Whether it’s a good (read sustainable) idea and whether it would work in this country is a topic for another day; however, there was something on which Eisenberg and Farrington (and we) agreed – the positive role 401(k) financial advisors play in successful retirement outcomes.
“The people we surveyed who had [advisors] are saving more than those who don’t and are more likely to have a financial plan and short-term goals to match the plan,” Farrington concluded. “We believe that access to quality financial advice is a piece to this puzzle for solving this problem.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
