Monday, January 24, 2005

Americans save more for retirement than anyone else.

If the US is unprepared for the retirement of the baby boomers -- with the boomers saving too little and government retiree programs underfuned -- well, at least the relative good news is that across the rest of the world the situation is worse.

A new survey of people in 15 nations finds that Americans save more than anyone else for retirement, an average of $687 a month. Americans also start preparing earlier in life for retirement, in their mid-thirties.

In contrast, the savings figure for Italy is $208, the Netherlands $259, France $264, and Japan $381. On average people don't start preparing for retirement until they are in their 50s in Italy and Japan.

Perhaps not coincidentally, the nations where people save the least are those that promise the most generous government-paid retiree entitlement packages. While following the US at the top of the list of nations where people save the most are the other English-speaking nations of the "Anglosphere" where retiree entitlements are smaller.

Yet the much larger entitlement packages of the Continental nations and Japan don't seem to have made their people more happy with their retirement prospects.

For Americans, "the word 'retirement' evokes positive images and, compared to other countries, very few negative images". Americans are more optimistic about their level of retirement income -- and are more open to the idea of delaying retirement age if need be as a necessary reform, with only a minority objecting.

The less optimistic views in the Continental nations may result from their peoples' knowledge that they are more dependent on governmental largess (in France and Italy fewer than 10% report having a pension fund with an employer) -- and that their government entitlement programs are even more deeply underfunded and face even larger coming financial crises than the US ones.

The Continental nations are all atop the list of nations where the most people oppose reforms such as raising the retirement age -- and also atop the list of nations where the most people believe "major retirement reform" is coming.