May 5, 2005
How do the U.S.’s soon-to-shrivel retirement benefits compare with those of other countries? Short answer: not well. The OECD puts it in perspective:
For people who have spent a full career on average earnings, the average gross replacement rate of earnings provided by a pension in OECD countries is 57% of pre-retirement earnings.
But this figure, too, varies substantially between countries: in Luxembourg, the replacement rate for a full-career worker on average earnings is 102%, meaning that the pension is actually higher than earnings before retirement. Austria, Hungary, Italy, Spain and Turkey also provide generous pensions to full-career workers on average earnings, with replacement rates in excess of 75%.
By contrast, Ireland, which has only basic and targeted pensions and no earnings-related scheme, has the lowest replacement rate at average earnings, at 30.6%. Mexico, New Zealand, the United Kingdom, and the United States are also among the least generous, with replacement rates at average earnings of between 36% and 38.6%.
The U.S.’s current 36% replacement rate leaves it in the bottom five of the OECD’s 30 member countries. But with the help of Bush’s Social Security plan—which offers a projected average-earner replacement rate of 30% by 2045 and 26% by 2075—the U.S. will plunge to an effortless last place.
Moral: should have emigrated to Luxembourg.
TrackBack URL for this entry: