Friday, January 29, 2016

Are we saving enough for retirement: France

In France the Answer appears to be Maybe--Yes if you are older, perhaps if you are younger.

Older French workers who want to retire early have a good deal: The minimum age for a full pension for most of them is just 62 as long as they’ve contributed to the system for at least 41.5 years. France has a tax-funded pension and mandatory employer programs. A worker who earned France’s median wage receives 60.8 per cent of pre-retirement take-home pay. In October,

France raised the contribution period to receive a full public pension from 41.5 to 43 years — but only after 2020. By then, most of France’s baby boomers will have retired.

Many working age people in France (60%) not confident in their ability to maintain a comfortable retirement (Source “The Future of Retirement A balancing act” PDF File) They are also  worried, with just over half (58%) concerned about running out of money during their retirement. A similar proportion (67%) is concerned about having enough money to live on day-to-day. 41% of retirees say that their current standard of living is worse than the period immediately prior to their retirement.

In France 48% of workers are not saving enough for retirement however, there are some compelling reasons why people are not preparing adequately for a comfortable retirement:

Did not start saving early enough
In France 33% did not start savings early enough, while globally, almost two in five working age people (38%) and the same number of retirees (38%) admit they did not start saving for their retirement early enough. This is a key reason for over half of working age people in the UAE (55%), Brazil (54%), Indonesia (52%), and India (52%), and for around half of retirees in the USA (51%) and Australia (48%).

Cannot afford it
Lack of affordability was also the main reason cited by retirees for inadequate preparation in France (39%). Over a third (35%) of working age people and a quarter (26%) of retirees around the world say they cannot afford to prepare adequately for retirement. Around half of working age people in the UK (52%), France (52%), USA (51%), Australia (45%) and Canada (44%) say that lack of affordability is why they are not preparing adequately.

Were not aware of how much to save
More than one in five (22%) of working age people and three in ten (29%) retirees globally say they did not know how much they needed to save for a comfortable retirement. This rises to 41% of retirees in the USA and 39% in Singapore.

Paying off a mortgage or other debts
Mortgage repayments are a barrier to preparing for a comfortable retirement. More than a third(38%) of working age people in France  say that paying off their mortgage is preventing them from adequately preparing for retirement, with those in Singapore (41%), Malaysia (38%), Australia (35%) and the UK (30%) being the next most affected. Mortgage repayments were much less of a barrier to preparing for a comfortable retirement for retirees (9%).

Paying off other debts
Around the world almost a third (32%) of working age people say they cannot prepare adequately for a comfortable retirement because they are paying off other debts. This is a particular barrier for pre-retirees in the USA (51%), Malaysia (49%), Mexico (41%), and Canada (41%). However just 16% of retirees say debt repayment was a barrier to preparing for a comfortable retirement.

Another factor which prevent saving for retirement is:

The economic downturn has significantly influenced the ability of working age people to save for retirement.  In France, (38%) say the economic turndown of 2008-2009 is still affecting them.

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