Recent attacks on the 401(k) and its effectiveness appear to be off base, at least when compared with other countries and their retirement systems, even those with cradle-to-grave government services.
A recent survey of individuals in 19 developed countries found that Americans are the most confident in their retirement expectations. China took second and surprisingly, some European countries with strong government pensions, such as France, were among those with the lowest levels of retirement confidence.
Marketing research firm GfK asked 23,000 people around the world how strongly they agreed or disagreed with the following statement: “I am confident that I will have enough money to live the life I want when I retire.”
It found that, internationally, close to three in ten (28 percent) lack confidence that they will be able to afford the life they want during retirement, including one in ten (11 percent) who have no confidence in this at all. On the other hand, 42 percent believe they will have enough money for the life they want, including 18 percent who are completely confident.
The results show that men and women hold very similar levels of confidence. But when one looks at the separate age groups, it’s a different story. The older age groups show the highest percentages who say they have little or no confidence in being able to afford the life they want in retirement.
The 50-59 and 40-49 age groups both have over a third (35 percent) in this category, followed by the 30-39 year olds with 29 percent. Even among the 20-29 year olds – an age group where retirement is a long way off and with plenty of time to prepare for it – nearly a quarter (23 percent) lack confidence in being able to afford the life they want upon retirement.
Looking at those people who claim confidence in their ability to afford a good life come retirement, the highest levels are found among the 20-29 year olds, where nearly a half (48 percent) agree either somewhat or completely. This drops slightly to 45 percent for those aged 30-39 – and then drops considerably to just over a third (36 percent) among 40-49 and 50-59 year-olds.
Americans and Chinese lead for complete confidence in affording a good retirement
Looking at individual countries, United States, China, Russia and Spain are the most confident in having enough money to live the life they want when they retire.
Sweden, Poland and France, by contrast, mark themselves the most as completely lacking confidence.
Sweden and Poland both have 21 percent disagreeing completely with the statement of confidence, followed by France at 20 percent.
“Countries that provide government-funded pensions – as many of the European countries do – actually have lower levels of confidence than countries such as the USA, where there has been no government-funded pension plan,” Alexander Zeh, GfK’s global lead for financial services research, said in a statement. “This suggests that people in Europe have finally become aware that the aging population means that public pensions can no longer be relied upon to support them comfortably in retirement. Conversely, people in the likes of America have grown up knowing that they have to fund their own retirement from the start, and so are in a better mind-set than their newly awakened European counterparts.”