Thursday, July 05, 2012

OECD study shows that US lags in "replacement rate" for retirees (despite higher fertility rates)


MSN has a story about a report from the Organization for Economic Cooperation and Development, showing that the United States  falls below many other western and advanced nations on “replacement rate” for retirees.  That number refers to the percentage of pre-retirement income earned after retirement (from social security and pensions) to before (from wages).

Complicating the analysis is the fact that the United States doesn’t have mandatory private pensions, whereas many European countries do. 

European countries face a more severe “demographic winter” crisis than does the US because their birthrate among original populations is lower.

The report doesn’t include the effect of inheritance (and investment income based on that).

The replacement rate from public pensions (some of which replace social security) in the US is 50%.

The link for the story about OECD (34 countries) analysis is here.

OECD’s pension report is here

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