Cradle-to-grave benefits available in many European countries have Americans believing their European counterparts would have less retirement worry.
They’d be wrong.
A new survey from ING finds that 61 percent of people living in 13 European countries are concerned about having enough money in retirement.
Despite the still-strong prevalence of defined benefit pensions across the pond—and a major shift from DB to DC here at home—responses are similar in the USA and Australia.
“About half of retirees in Europe tell us that they don’t continue to enjoy the same standard of living they had when they were working,” Jessica Exton, a behavioral scientist in ING’s consumer economics team, writes. “Two in five of those in Europe who have not yet retired confirm they expect to get less in retirement than they paid into their pension.”
And more than half of Europeans who have not yet retired “tell us they expect they’ll need to continue to earn some money after they’ve officially stopped working.”
Adding to the uncertainty, she notes, studies suggest many may end up retiring earlier than they expect—and not by choice.
No savings
ING claims about one in four Europeans have no savings at present, again similar to Australia and the USA.
“Without even a minimal savings buffer, families and individuals are less able to mitigate unexpected near-term events, such as car breakdowns or health emergencies, let alone build funds for retirement. The typically recommended minimum emergency buffer is the equivalent of three to six months’ net pay. But our full data set shows that even among Europeans who have savings, 42 percent have no more than three months’ take-home pay put aside.”
And if people cannot save today, Exton rhetorically asks, how can they save for retirement?
Digital impediments
“Half of respondents in our Europe sample tell us they use mobile apps for spending or transferring money. However, they admit the main impact of this is simply being able to spend money more often— hardly conducive to boosting long-term savings.”
Exton concludes that “smaller percentages give answers that suggest using mobile apps, for example, benefits their long-term savings or investments.”
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.
