BOSTON--(BUSINESS WIRE)--Retirement conditions remain steady this year, following improvements in retirement security across nearly all developed countries last year, according to the latest Global Retirement Index from Natixis Investment Managers (Natixis IM). The top performers in Natixis IM’s annual Global Retirement Index (GRI) have delivered more consistent rankings across all sub-indices, showing a stabilizing global retirement outlook. The list of countries that rank in the top 10 of the index has remained the same for two consecutive years. However, individuals are feeling the pressure as more and more come to the realization that they are on their own when it comes to funding income later in life.
Canada maintained a 74% score in this year's index. Although the country dropped one spot to 13th in the rankings for overall retirement security amid weak demand for domestic jobs, Canada scored consistently year-over-year across all indices, making it to the top 10 in health and finances in retirement and the top 20 for Quality of Life.
Created in collaboration with Core Data Research, the GRI provides a global benchmark that incorporates the wide variety of factors essential for people to enjoy a healthy and secure retirement. These include important financial factors as well as considerations such as access to and cost of healthcare, climate conditions, the state of governance and general happiness of the population. The GRI rankings are relative, not absolute, and are based on an aggregate of mean scores from 0% to 100% for 18 performance measures in each of its four sub-indices – Finances in Retirement, Material Well-being, Health, and Quality of Life – which are combined to provide an overall picture of the environment for retirees.
Dave Goodsell, Executive Director of the Natixis Center for Investor Insight, said: “Globally, we’ve seen a consistent set of results in this year’s index, though there is room for improvement to be made for most. The balancing act between lowering inflation, maintaining employment numbers and driving growth has been tricky, and the good news-bad news scenario for retirement continues.”
Canada’s Rankings
For the four sub-indices, Canada ranks as follows in the 2024 GRI:
- 10th in Health: Canada rose 3 spots to 10th in Health based on improved performance in life expectancy, as well as progress in insured health expenditure.
- 10th for Finances in Retirement: Canada retains its place from last year due to improving inflation and interest rate outlooks, though its peers have made more pronounced progress in this area. The Bank of Canada expects inflation to dip below 2.5% in the second half of 2024 before returning to targets by 2025.
- 17th in Quality of Life: Canada maintained its ranking from last year but improved its environmental factors score one percentage point.
- 23rd in Material Wellbeing: Canada drops from 19th to 23rd in Material Wellbeing due to its unemployment rate, which is predicted to average 6.1%1 in 2024 amid weak domestic demand for jobs.
Individuals increasingly feel they’re on their own for retirement security
Despite the generally positive outlook for global retirement security, results from the long-running Natixis Global Survey of Individual Investors* show that the number of individuals who believe it is increasingly their responsibility to fund retirement on their own, rather than to rely on public and private pensions, grew from 57% to 81% between 2015 and 2023. Additionally, the number of individuals who believe it will take a miracle to achieve retirement security increased from 25% in 2021 to 33% in 2023.
One in five (20%) investors said that even if they saved $1million, they still couldn’t afford to retire – that includes 20% of those who have already accumulated $1 million.
The four key risks facing individuals today:
- Interest Rates: While low rates had been a key risk for retirees for the 15+ years following the Global Financial Crisis, today’s higher rate environment presents new risks. Most notably with more than $6 trillion invested in money market funds, certificates of deposit and similar instruments2, they need to be aware of how today’s cash trap could keep them from meeting their need for a sustainable source of long-term income.
- Inflation: The worst of it may be past as inflation slowly recedes towards central bank targets, but the post pandemic bout of rising prices has served as a stark reminder of just how fast and how severe inflation can be. Now that 80% of investors say recent events reminded them of just how big a threat inflation poses to their retirement security, investors will need to act accordingly to ensure they a prepared for any new episodes down the road.
- Public Debt: Public debt in OECD countries has more than doubled in the first quarter of the 21st Century as policy makers first navigated the Global Financial Crisis and then the Global Pandemic. While the steps were needed to stave off economic meltdown in the short term, policy makers are left with paying down long-term debt. A growing number of individuals are concerned they will be asked to pick up the tab and worry it will result in cuts to the government retirement benefits that are a cornerstone for their retirement income plans.
- Investors Themselves: A secure retirement is a journey not a destination. Success requires realistic expectations and meaningful commitment from individuals. While many may appreciate this in concept, not every investor set makes reasonable assumptions and sets realistic goals. Natixis IM survey results show that investors do not have a consistent vision for what it will take to succeed.
1 S&P Global Ratings. (March 26, 2024). Economic Outlook Canada Q2 2024: Staying Subdued. From https://www.spglobal.com/ratings/en/research/articles/240326-economic-outlook-canada-q2-2024-staying-subdued-13051363
2 St. Louis Fed. (June 19, 2024). Financial assets of money market mutual funds in the United States from 2000 to 2023 (in billion U.S. dollars) [Graph]. In Statista. Retrieved August 15, 2024, from https://www.statista.com/statistics/188712/us-money-market-mutual-funds-total-financial-assets-since-1990/
“As individuals increasingly take charge of their retirement planning amidst these challenges, financial service providers must become more proactive in supporting them,” said Liana Magner, Executive Vice President and Head of Retirement and Institutional in the US for Natixis Investment Managers. “To prevent future crises, it's crucial to offer personalized solutions that address both the current economic landscape and individuals’ specific retirement needs, including access to both public and private markets.”
To view and download a full copy of the report, visit: https://im.natixis.com/en-intl/insights/investor-sentiment/2024/global-retirement-index
* Natixis Investment Managers’ 2023 Global Individual Investor Survey was conducted by CoreData Research in February and March 2023. The survey included 8,550 individual investors in 23 countries and regions including Asia, Europe, Latin America, and North America.
Methodology
The Global Retirement Index assesses factors that drive retirement security across 44 countries where retirement is a pressing social and economic issue. It was compiled by Natixis Investment Managers with support from CoreData Research. The index includes International Monetary Fund (IMF) advanced economies; members of the Organization for Economic Cooperation and Development (OECD); and the BRIC countries (Brazil, Russia, India and China). The researchers calculated a mean score in each category and combined the category scores for a final overall ranking of the 44 nations studied. The GRI analysis was carried out between June – September 2024.
About the Natixis Center for Investor Insight
The Natixis Center for Investor Insight is a global research initiative focused on the critical issues shaping today’s investment landscape. The Center examines sentiment and behavior, market outlooks and trends, and risk perceptions of institutional investors, financial professionals and individuals around the world. Our goal is to fuel a more substantive discussion of issues with a 360° view of markets and insightful analysis of investment trends.
About Natixis Investment Managers
Natixis Investment Managers’ multi-affiliate approach connects clients to the independent thinking and focused expertise of more than 15 active managers. Ranked among the world’s largest asset managers1 with more than $1.3 trillion assets under management2 (€1.2 trillion), Natixis Investment Managers delivers a diverse range of solutions across asset classes, styles, and vehicles, including innovative environmental, social, and governance (ESG) strategies and products dedicated to advancing sustainable finance. The firm partners with clients in order to understand their unique needs and provide insights and investment solutions tailored to their long-term goals.
Headquartered in Paris and Boston, Natixis Investment Managers is part of the Global Financial Services division of Groupe BPCE, the second-largest banking group in France through the Banque Populaire and Caisse d’Epargne retail networks. Natixis Investment Managers’ affiliated investment management firms include AEW; DNCA Investments;3 Dorval Asset Management; Flexstone Partners; Gateway Investment Advisers; Harris | Oakmark; Investors Mutual Limited; Loomis, Sayles & Company; Mirova; MV Credit; Naxicap Partners; Ossiam; Ostrum Asset Management; Seventure Partners; Thematics Asset Management; Vauban Infrastructure Partners; Vaughan Nelson Investment Management; and WCM Investment Management. Additionally, investment solutions are offered through Natixis Investment Managers Solutions and Natixis Advisors, LLC. Not all offerings are available in all jurisdictions. For additional information, please visit Natixis Investment Managers’ website at im.natixis.com | LinkedIn: linkedin.com/company/natixis-investment-managers.
Natixis Investment Managers’ distribution and service groups include Natixis Distribution, LLC, a limited purpose broker-dealer and the distributor of various US registered investment companies for which advisory services are provided by affiliated firms of Natixis Investment Managers, Natixis Investment Managers S.A. (Luxembourg), Natixis Investment Managers International (France), and their affiliated distribution and service entities in Europe and Asia.
1 Survey respondents ranked by Investment & Pensions Europe/Top 500 Asset Managers 2024 ranked Natixis Investment Managers as the 19th largest asset manager in the world based on assets under management as of December 31, 2023.
2 Assets under management (“AUM”) of current affiliated entities measured as of June 30, 2024, are $1,320.8 billion (€1,232.3 billion). AUM, as reported, may include notional assets, assets serviced, gross assets, assets of minority-owned affiliated entities and other types of non-regulatory AUM managed or serviced by firms affiliated with Natixis Investment Managers.
3 A brand of DNCA Finance.
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