Many people put thoughts of retirement savings on the back burner, relying on hopes that their national pensions will take care of them in their golden years.
“While many countries do offer national pension benefits, what people ultimately receive once they retire may not be the financial cushion they had hoped for,” explains Richard Cayne of Meyer International.
How well are you covered?
Many nations, developed, newly developed, and developing, have some type of pension system in place. It may seem quite simple – you contribute a certain amount over a certain period, then the government pays you back and sometimes provides additional services like healthcare once you retire.
The problem is that while you are contributing, the government must be paying out to current retirees, often using your money. As life spans increase, the number of retirees compared to those contributing may become unbalanced. This, compounded with the possibility that the government may not be investing pension funds wisely, may result in your benefits not being what you expect.
If you live overseas, or are planning on retiring overseas, there are other issues you need to consider. While living overseas, you probably are not contributing automatically to your pension, so your benefits may be less than you expected, or you may have inadvertently opted out from the system. If you retire overseas, some countries have different pay-outs for their pensioners abroad.
How adequate is your country’s pension regime?
Some countries provide resources for their citizens to check their pension status. For example, the UK offers an online check for people to find out how much they can expect from their state pension and when they would qualify to receive it, along with advice on how to increase the amount. Canada also offers similar online access.
As for the pensions themselves, you may want to see how it ranks. The OECD does a yearly analysis of their members’ pension systems. And there is also the Melbourne Mercer Global Pension Index that compares the adequacy and sustainability of various pension systems.
You will see that no country has a perfect pension system, so you would best be served to make sure you have your own investment portfolio growing to meet your retirement needs. It is always good to get a financial health check with a trusted adviser to make sure that you’ve properly funded your future!