The share of Americans who have not started saving for retirement at all is only 14 percent, the lowest percentage among 16 countries included in a recent worldwide survey from HSBC. The countries with the next lowest percentages are Malaysia and Mexico, at 15 percent each.
The country with highest share of people not saving for retirement is Argentina, where two out of five people hadn’t started socking away money. Egypt follows at 37 percent and France at 33 percent. Overall, almost a quarter of pre-retired people worldwide have not started saving for retirement, 10 percentage points higher than the U.S. average.
So why are Americans better at saving for retirement? A couple of reasons, says Michael Schweitzer, global head of sales and distribution at HSBC.
“U.S. businesses were early movers to defined contribution plans versus defined benefit plans,” says Schweitzer. “In addition, employee and investor education programs, ease of access to financial calculators and robust offerings of wealth management services are all contributors to the higher than average participation rates of U.S. individuals."
There’s also the uncertainty surrounding Social Security that is prompting Americans to be proactive about retirement savings. “For instance, changes in retirement eligibility age has put more onus on the individual to take ownership for their retirement planning needs,” says Schweitzer.
Only about half of U.S. retirees surveyed by HSBC depended on a state pension or Social Security to fund their retirement. Slightly more (56 percent) relied on their cash savings, the third highest percentage among the 16 countries after Singapore (59 percent) and Hong Kong (62 percent).
Americans also stay in the workforce longer, says Schweitzer, by an average of five year more --35 years for U.S. workers versus 30 for their global counterparts.
U.S. retirees were also more likely to borrow money during their golden years. Nearly three in five have done so, above the average of 41 percent. Only retirees in Mexico (68 percent) and Argentina (72 percent) were more likely to turn to credit in retirement.
That could help explain why the U.S. ranks only 14th in retirement security worldwide, according to a study from Natixis Global Asset Management. New Zealand, Australia, Canada and several countries in Northern Europe make up the top ten of the 43 countries in the study.
Income inequality, funding threats to Social Security and Medicare and the shift to defined-contribution plans are factors undermining retirement security for Americans, the study concluded.