Canada and Germany are among the countries with the most insufficient retirement plans, according to an new financial assessment. Such is the extent of inadequate provision that almost one half of people surveyed are planning to work on past their nominal retirement date.
This is according to the website MoneyTransfers.com, who have provided Digital Journal with their survey output.
MoneyTransfers.com CEO Jonathan Merry explains: “The two countries, Canada and Germany, have pension schemes for their citizens. However, the plan doesn’t guarantee financial security. Most people believe they must supplement their earnings by working past retirement age.”
Why are many retirement plans insufficient?
Contributing the maximum amount to the retirement plan is not enough; one might need to save extra. Factors at play might render contributions inadequate in the two countries. These factors are:
Inflation
The amount in the retirement plan may seem adequate upon retirement. Yet, inflations regressive effects may mean it will often not be enough. The main threat to retirees living on fixed incomes is the slow but steady rise in the cost of goods and services. Over time, it reduces the purchasing power of retirees.
People in both countries are concerned about inflation. For instance, 47 percent of Canadians and 38 percent of Germans think their savings would not last through retirement.
As the global economy shifts, the savings become inadequate. Furthermore, the increasing life expectancies mean people have to work even after retiring.
Relative economic issues
Most known western countries are grappling with retirement plans. The findings revealed that three out of ten U.S. citizens believe that they must work after retirement to sustain themselves financially. Mexico and France are also on the line. Here, 28 percent of their population believes that the retirement plan is not sufficient.
On the other hand, Iceland’s system comes in at a high ranking. The nation offers a state pension in two parts. One mandated employer and employee contributions.
Additionally, they offer optional employer efforts to state-approved pension schemes.
It appears that the case for government intervention and social democratic approaches are optimal when it comes to protect citizens into old age.
Indeed, the quality of pension systems available to workers varies greatly across the globe and there are some parallels with social and economic systems.
