Australia ranks 3rd globally for retirement finances

retirement income Natixis Investment Managers Superannuation retirement

18 September 2023
| By Jasmine Siljic |
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Australia has ranked third in the world for finances in retirement, but the nation’s ranking has fallen in the overall global retirement index, Natixis Investment Managers reveals.

The finances in retirement ranking was an increase from Australia’s spot at fourth in the world in 2022.

As a sub-index of the firm’s Global Retirement Index (GRI), finances in retirement is based on performance across old-age dependency, bank non-performing loans, inflation, interest rates, tax pressure, government indebtedness and governance. 

Australia’s score of 73 per cent in the category was largely driven by improved bank non-performing loans, where the nation rose from 10th in 2022 to fifth in 2023.

The country’s overall ranking in the GRI for 2023 fell two spots from fifth last year to seventh, despite a higher overall score of 78 per cent compared to 75 per cent in 2022.

The GRI rankings, created in collaboration with CoreData Research, take into account four sub-indices to evaluate retirement environments across the globe: finances in retirement, material wellbeing, health and quality of life.

The top five countries are Norway, Switzerland, Iceland, Ireland and Luxembourg. The Netherlands ranked sixth, followed by Australia, New Zealand, Germany and Denmark.

Natixis IM said the score was driven by its high ranking in the finances in retirement and the health sub-indices.

However, the nation fell from first place to 20th this year in the inflation category, alongside a decrease from 11th to 20th in interest rates. 

“In the post-COVID economic environment, we’ve seen high inflation and rising interest rates place increasing financial pressure on Australian households. So, it’s no surprise that some investors are concerned about their financial security in retirement,” commented Louise Watson, country head of Australia and New Zealand at Natixis IM.

Natixis IM’s data also found that Australians are retiring at 65, later than the global median retirement age of 61. 

“Australia’s superannuation system is world-class, and one of the reasons why Australia consistently ranks in the top 10 in the world for retirement security. 

“It is concerning that we are retiring later than other countries though, this really shows how important it is for us to make our investments work as hard as possible while we are employed and well into retirement,” Watson observed.

To ensure an earlier retirement, she encouraged Australians to look beyond Australian equities and property.

Instead, incorporating a more diversified range of strategies in their portfolios will give them a better chance of retiring when and how they want. 

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