EUROPEAN PAPERS ON THE NEW WELFARE

5. Life During Retirement

The AXA Retirement Scope survey results are clear: most people living their bonus years are quite content. The data show that retirees are an overwhelmingly happy bunch, and that age seems not to matter. About 85% of the more than 5,000 retirees surveyed in the 16 countries described themselves as either ‘very happy’ or ‘quite happy’, with little difference between those younger than 65 and those aged 65 and over.
Most retirees said that both the quality of their lives and their standard of living had remained constant or improved after retirement. Retirees’ experience shows that the overall quality of their lives is good: nearly one-third of the retirees surveyed reported that their quality of life actually improved after retirement, while more than 40% said it had remained constant.
The AXA Retirement Scope survey results suggest that the way retirees evaluate quality of life is not strictly tied to their standard of living. Many more retirees reported a decrease in standard of living (35%) than a decline in quality of life (25%) compared to their working years. While the results do show a correlation between the way respondents judge their quality and standard of living, it seems clear that quality of life depends on other variables as well.
Judging by the experience of their elders, the vast majority of working people can look forward to decades of satisfying life once they retire from the workforce. But as pension systems evolve and expectations change, tomorrow’s retirement realities will not necessarily mirror yesterday’s retirement experience. Indeed, evolving expectations and macro economic trends may help explain why working people expressed cautious optimism mixed with widespread anxiety. As they anticipate retirement, one-third of the current working population in the 16 countries surveyed said they anticipated a decline in their living standard.
For retirees, the connection between happiness and income was crystal clear. In every country surveyed, retirees who said their income was ’insufficient’ or ‘completely insufficient’ tended to say also that they were ‘not very happy’ or ‘not happy at all’. In Japan for example, only one percent of retirees with sufficient income said they were not happy, compared to 25% with insufficient income. In New Zealand, home of the world’s happiest retirees, only two percent of those with sufficient income described themselves as unhappy.
Likewise, the survey results showed a direct relation between health and happiness. In every country surveyed, overwhelming majorities of retirees who described themselves as ‘very happy’ also said they felt either ‘rather healthy’ or ‘very healthy.’ It is not that people feel happy because they feel healthy but rather good health seems to be a prerequisite for feeling satisfied during retirement. At the same time, relatively poor health does not necessarily make people feel miserable. In most of the countries surveyed, large numbers of retirees who said their health was not good nevertheless described themselves as ‘very happy’, including more than 20% of retirees in Belgium, France, Hong Kong and the Netherlands.

6. Baby Boomers

In terms of retirement age, the baby boomers might be described as the frustrated generation — with retirement expectations falling short of desires. Among working people aged 45 and over, the vast majority said they would like to retire before their 65th birthday, but only half expect to do so. When it comes to their retirement income, boomers might be described as the anxious generation as well. More than 40% of those surveyed anticipated that their retirement income would-be ‘insufficient’ or ‘completely insufficient.’ Only seven percent expect ‘completely sufficient’ retirement income. Uncertainty over the amount of their retirement income further fuels baby boomer anxiety. A substantial majority reported that they did not know what their financial resources would be.
Nearly half of working people aged 45 and older responded that they would like to hold a paid job after retirement. This contrasts sharply with the attitudes of older generations: fewer than 15% of current retirees responded that they actually hold a job.
Despite widespread concern, only 55% of working people survey-wide said they had begun setting aside money for retirement. As might be expected, the proportion rises as retirement approaches, with nearly two-thirds of working baby boomers reporting that they had begun planning. Although they do appear to be more provident than their elders, working people aged 45 and older are outpaced by their younger colleagues. Perhaps to help compensate for their relatively late start, baby boomers do save considerably more than younger working people for retirement — about 36% more per month.

7. Retirement and Gender

Women’s retirement dreams and realities differ substantially from those of men. The AXA Retirement Scope results reveal that retired women suffer more financial hardship than men, which may help explain why their attitudes towards retirement are more mixed. However, there are large disparities in women’s experiences and expectations from one country to another.
Working women in Belgium, Italy and Singapore count among the world’s most optimistic, as far as living standards after retirement are concerned. More than three fourths of those in Belgium and Italy expect a stable or higher standard of living upon retirement, compared to 71% of Belgian and Italian men. In contrast, working women in Germany, Japan, Spain and the UK are particularly pessimistic. In fact, a majority of working women in Germany expect their standard of living to decline after retirement, compared to 44% of working men. The difference between male and female expectations is even greater in Spain, where 37% of women say their living standard will decline after retirement, versus 23% of men. A similar gap was found in the UK, where 42% of women said their living standard would decline, compared to only 27% of working men. The highest proportion of women expecting lower living standards comes in Japan, where nearly two-thirds expect a decline.
The expectations of working women do not match the realities of their elders. Survey-wide, 35% of retirees, men and women combined, reported a drop in their living standard after retirement. In half of the 16 countries surveyed, retired women reported substantially more decline than their male counterparts. Among retirees, the difference between women and men was particularly striking in five countries. In France, for example, the only country where a majority of retired women said their standard of living had declined, a lower standard was reported by 58% of women retirees, versus 44% of retired men. There were also large disparities in living standard declines between the sexes for retirees in Italy, the Netherlands, New Zealand and Portugal.
The results show that retired women encounter more financial hardship virtually everywhere, except in the UK. Nowhere did the results show retired women more financially comfortable than men. Survey-wide, half of female retirees reported ‘insufficient’ or ‘completely insufficient’ income, compared to 41% of retired men.
The experience of female retirees undoubtedly helps explain why women tend to express less favorable attitudes towards retirement than men. Asked what came to mind when the word retirement was mentioned, working and retired people survey-wide made many more positive associations than negative ones. However, in the three countries with the highest proportions of ‘unhappy’ retired women — Italy, Spain and Portugal — negative associations outweighed positive ones. Elsewhere, retired women were also less enthusiastic about retirement than men.

8. Pension Politics

Nearly three-quarters of working people in half of the 16 countries surveyed said they expected to see their national pension system reformed over the coming decade. Smaller majorities agreed with that prediction in six other countries. Only in Hong Kong and Germany did fewer than half of working people say they were not expecting a system overhaul. Working people generally anticipated that pension reforms would bring cuts in benefits coupled with increases in required years. Large numbers of working people also expected to see reductions in public pension benefits, although by less overwhelming majorities.
The AXA Retirement Scope results show that extending the working years is not a very popular idea; large proportions of people in many of the countries surveyed said they were against any increase in the minimum retirement age.
Faced by the prospect of reduced benefits and a higher retirement age, people everywhere are assuming greater individual responsibility for their own retirement. It is not that they see a diminished role for government, but rather that they envisage a better balance between individual and public initiatives. While results vary from country to country, younger generations appeared to be more willing to accept individual responsibility than their retired elders. In every country surveyed, working people gave equal or more weight to individual responsibility than retirees.
Among today’s working population, attitudes differed sharply between the seven Anglo-Saxon countries, where there was a strong emphasis on the individual, and the three Mediterranean countries, where the individual role was cited less frequently. At the same time, working people everywhere saw government as the cornerstone of the retirement system. Analyzed according to age groups, the AXA Retirement Scope survey results show clearly that younger workers are looking more towards themselves and less towards government for financing retirement.

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