In this article, we take a look at the 25 best countries for a comfortable retirement. You can skip our detailed analysis of the aging demographics and the resulting economic shifts and go directly to 10 Best Countries For A Comfortable Retirement.
Retiree Population: By Numbers
The UN estimates suggest that there are 703 million people aged 65 years or older as of 2019, a number that is expected to jump to 1.5 billion by 2050, with every 1 in 6 individuals being a retiree. Further, the number of individuals aged 80 years or older is also expected to increase threefold in the next three decades.
The percentage of retirees is expected to be above the global average, at 30%, in countries like Greece, Italy and South Korea, according to OECD. However, 80% of the retirement-age individuals will be living in low to middle income economies by mid century, as per figures from WHO.
This is resulting from the decrease in birth rate, which corresponds to the expanding share of women in the workforce, and increasing life expectancy, with chances of surviving at the age of 65 nearly doubling since the late 19th century, according to UN estimates. In 2020, individuals aged 60 years and older outnumbered children younger than 5 years, according to WHO.
Many countries are ill-prepared to deal with the economic implications of this trend, and lack the social programs that are needed for the increasing number of retirees.
What Are the Economic Implications of the Changing Population Demographics?
One of the most obvious implications of an aging population would be the slowdown in the labor-force growth, and consequently, the GDP growth. In fact, the GDP growth in developed economies is already slowing down, in part, due to aging population.
Another factor is that the elderly de-risk their portfolios by moving from equity securities to debt securities due to their short-term horizon.
As the ratio of equity to debt investment decreases, the stock markets around the world, particularly the growth-based companies, could see a decline. Moreover, aging individuals spend more and save less, which could lead to a rise in real interest rates.
Further, working-age people will be paying more in taxes to support the social programs for the elderly and governments will also be borrowing more, as the ratio of workers to consumers (support ratio) falls.
Persistent Inflation
According to IMF estimates, the support ratio is expected to fall by 0.26 percent per year between 2015-2050 in the US, 0.40 percent in other developed countries and 0.80 percent in China. Workers are deflationary, since they produce more than they consume. A falling support ratio could mean persistent inflation.
Labor shortage is also expected to lead to a rise in real wages. This trend can already be sensed in the manufacturing sector, and especially, in the services sector, since the latter has the dominant share in advanced economies.
Japan is often cited as the harbinger for things to come, and it is often pointed out that Japan is deflationary. However, the country has downward pressure on prices due to the Chinese global labor supply in the manufacturing sector.
The stark implications can make macroeconomic conditions uneasy for the elderly but many countries have adopted measures to insulate both workers and retirees from the broader macroeconomic problems.
How Are Countries Preparing for the Aging Population?
Many countries around the world, particularly the ones at the forefront of aging decline, are adopting different means to prepare for the aging demographics.
For instance, Singapore has adopted a number of approaches, with one of them being the Central Provident Fund Lifelong Income for the Elderly (CPF LIFE). The scheme is financed through mandatory contributions from citizens to their CPF accounts and is designed to cover the retirement needs of Singaporean citizens for as long as they live after retirement.
On the other hand, MediShield Life, a health insurance plan in Singapore, is designed to provide lifelong medical coverage for Singaporean retirees, and is funded through annual premiums.
Japan, whose population share of 65 years and older individuals is expected to increase to 38% by 2050, is also one of the most well-prepared to protect its elders from economic shocks.
In the year 2000, Japan implemented a comprehensive long-term-care insurance program designed to assist individuals of 65 years of age or older with care facilities like home care and assisted-care facilities, among others, and further improved the program in 2011.
Japan is also tapping into its advantages in industrial robotics to compensate for its declining workforce. As of 2021, the Japanese workforce comprises 631 robots for every 10,000 human workers. However, when it comes to the best countries for retirement, no country matches Scandinavian countries, with their high quality social safety nets.
On the corporate front, ConocoPhillips (NYSE:COP), Amgen Inc. (NASDAQ:AMGN) and The Boeing Company (NYSE:BA) are among the most prominent companies that offer the best retirement plans for their employees.
For instance, ConocoPhillips (NYSE:COP) pays a 6% match after employees invest 1% of their income in each pay period. Moreover, ConocoPhillips (NYSE:COP) also offers additional match of between 0 and 6% based on employees’ ages and the company’s performance.
The Boeing Company (NYSE:BA), on the other hand, has a 401(k) plan for its non-union employees, instead of a pension plan, with The Boeing Company (NYSE:BA) matching 75% contributions on the first 8% of base pay contributions from employees.
Finally, Amgen Inc. (NASDAQ:AMGN) provides retirement benefits to its employees through its investment fund, in which the company makes a 5% contribution upfront, even if the employee hasn’t made a contribution to the plan. Amgen Inc. (NASDAQ:AMGN) also has generous stock purchase incentives for its employees.
We have defined ‘best countries for a comfortable retirement’ as ones that fare better in material well-being, access to quality healthcare and financial programs, and a clean living environment.
In this regard, we have ranked them in a descending order of high retirement-comfort based on the Global Retirement Index of 2022. It measures 18 indicators to get insight about the best countries for retirees and assigns them a percentage score, with higher percentage scores corresponding to higher retirement comfort.
Here are the 25 best countries for a comfortable retirement:
25. Estonia
Global Retirement Index Score: 66%
Estonia is fast-establishing itself as one of the most popular destinations to work and retire in. The country has a three-tier pension system consisting of state, compulsory funded pension as well as supplementary funded pensions.
People are eligible for the pension system if they have worked in a pensionable service for 15 years in Estonia, or countries like Norway, Liechtenstein, Iceland, Switzerland or Canada.
24. France
Global Retirement Index Score: 66%
France is one of the best countries for a comfortable retirement, with a top of the line social security program. In addition, it is one of the largest economies in Europe, with a high GDP per Capita.
23. Malta
Global Retirement Index Score: 68%
Malta is a popular country among expats, and the retirement life in the country is one of the major factors for this. The cost of living in the country is low, relative to other European countries, with $2,331 as the monthly average cost, as per International Living.
22. Japan
Global Retirement Index Score: 69%
Contrary to popular belief, Japan does offer citizenship to foreigners. However, the process is excruciatingly hard, with a lot of paperwork. That said, the country has one of the best social safety programs for retirees in the world.
21. Slovenia
Global Retirement Index Score: 69%
Slovenia is located in Central Europe. The cost of living in the country is lower than the EU average, but the standard of living is high. Slovenia has also implemented an age-friendly cities program since 2008, with the objective of strengthening community support.
20. Belgium
Global Retirement Index Score: 69%
Belgium is one of the best countries for a comfortable retirement. It has a high standard of living, historic cities and a delicious cuisine, making it one of the top destinations for expats.
19. United Kingdom
Global Retirement Index Score: 69%
The UK has some of the best welfare benefits in the world, making it one of the top choices for people to retire in. However, the cost of living in the country can be high, as compared to others.
18. United States
Global Retirement Index Score: 69%
The US has a relatively high healthcare cost, but its strong rule of law, coupled with its advanced healthcare facilities, financial services and multiculturalism makes it one of the best countries to retire in.
17. South Korea
Global Retirement Index Score: 70%
South Korea is another country where it is hard to get hold of a citizenship. However, it has some of the best health and long-term care insurance plans in the world. Foreigners who reside in the country are also subject to the compulsory coverage of South Korea’s National Pension Scheme.
16. Israel
Global Retirement Index Score: 70%
Israel is one of the most developed countries in Asia, and offers various social, cultural and financial benefits to retirees. It is especially easy for members of the Jewish community to immigrate to the country. Non-Jewish foreigners can obtain citizenship through naturalization, after living in Israel for three years as permanent residents.
15. Canada
Global Retirement Index Score: 71%
Canada is one of the best countries for a cozy retirement. Public healthcare and education are free in Canada, and there are myriad of other benefits like disability, housing and public pension benefits.
14. Austria
Global Retirement Index Score: 71%
Austria is one of the biggest economies in Europe, and has strong social programs, making it one of the best countries for the elderly.
13. Sweden
Global Retirement Index Score: 71%
Sweden has the second best infrastructure in the world after Germany, a highly developed economy, a robust social safety net and one of the cleanest natural environments in the world.
12. Finland
Global Retirement Index Score: 71%
Finland has one of the biggest shares of the 60 years olds and above, at 27%, and the country has active policies and frameworks in place to support its aging population. In this regard, Finland is experimenting with various measures like cohousing and municipally-subsidized community support centers, apart from generous social safety programs.
11. Germany
Global Retirement Index Score: 72%
Germany is the most powerful economy in Europe, with the best infrastructure in the world, as per the aggregate logistics performance index. The medically necessary public healthcare is free in Germany and is considered high quality.
